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Men-women wage differentials: Evidence from Syria Abstract The objective of this study is to investigate the relationship between education and wages in Syria to discover whether the average returns to education for women are different from those for men, and if the women earnings differ from men s according to the education level, type of employment, ethnicity, and across sectors. To answer this, the data will be collected from many sectors in Syria. The study will distinguish between private and public sectors wage differences due to educational level obtained by individuals. The study will cover the period between 1998 and 2008. The results will clarify if the differences are due to different characteristics of human capital or to labor market discrimination. Introduction Economics of education is a branch of economics concerned with the economic result of education on individuals and, as a result, on the whole economy. After the establishment of 'human capital' in the early of 1960s in the literature of economic growth and development, the relationship between education and earnings has been investigated widely around the world making this subject a cornerstone of the economics of education, (Psacharopoulos, and Ng Ying, 1994). The more education you get, the more money you are likely to earn. It is known that, in general, the level of education one can get will affect positively on his income or earnings. 2
This effect is called return to education which is known as the more income the individual get as a result of completing one more year of education. However, the question is do women get the same return to their education as men? Actually, it is well known, in general, that women s earnings are less than those of men s. although these differences vary across countries and the level of development achieved by different countries and regions, but it is well documented that women do suffer from different forms of discrimination (less wages, relatively lower hierarchy positions in organizations, lower retirement age in some countries, etc). One of the objectives of this study is to investigate the relationship between education and wages in Syria to discover whether the average returns to education for women are different from those for men, and if the women earnings differ from men s according to the education level, type of employment, ethnicity, and across sectors. Another objective is to analyze whether discrimination behind these differences, or they are due to the different characteristics between men and women. Also, it is meant to test the proposition saying that men earn more as a result of their better characteristics. Aims of the study: The aim of this study is to try to answer the following questions. Do women suffer from wage discrimination in Syria? And how much of the differences are attributed to human capital characteristics and how much to labor market discrimination? In particular, in which sectors this issue is more remarkable? And in what education level this phenomenon is more addressed? 3
Importance of the study: This study is mainly combined from two parts. The first one, which is literature review, seeks to offer a thorough understanding of the relationship between education and earning according to many factors (market sector, gender, type of degree, type of institution, and education level). This review is important as it provides a detailed insight into the relation among the previously mentioned variables in the previous works. The importance of the second part, the empirical work, arises, first of all, from the variation of the methods that will be adopted. Secondly it is significant as it first study the relation between wages and education in Syria from many aspects (age, type of education, type of employment, ethnicity, and the sectoral type) and also it was studied separately for male, female, and for the whole sample. It is hoped that this study will be useful to researchers, readers and newcomers into this field, as it will try to eliminate gaps in wage differential knowledge and suggests areas for future research. Literature review: Many questions rise in the literature regarding the relationship between educations and earnings. The effects of education on earning or income (in the light of available literature) could be studied from different aspects: region or country, education level, gender, over time in the same region or country, sector of employment ( public sector, formal private sector, and informal sector), and others. Among the authors who studied the gender wage gap was Machin and Puhani (2003), they used data from the labor force surveys of the United Kingdom and Germany and showed that, controlling for subject of degree explains a significant part of the male/female gender 4
wage differential amongst graduates. The results give credence to the view that promotes gender equality. Any reduction in the gender wage gap, should also involve looking at educational choices that shape the subject of degree chosen by men and women and hence that occur before young people enter the labor market. Another author tried to explain the gender wage gap, Chevalier (2003); he argues that differences in tastes and socialization may be accounted for much of the unexplained component of the graduate gender wage gap. The author uses a 1996 survey of graduates which includes twenty questions on character traits, motivations and expectations. By including variables not typically included in wage decompositions he was able to explain 84% of the gender wage gap, which itself is only 12.4% in raw terms. Similarly, Garcia-Aracil (2007) studied the gender earnings gap among European graduates of higher education, and investigated the competencies related to background of individuals and characteristics of the job. She found that job characteristics can determine most of the female worker s earnings advantage. In addition to that, the results indicate that part of the female earnings advantage can be determined by foreign language proficiency and computer skills. Finally, the author concluded (using estimation results) that gender gaps in earning differ in size and Composition. Similarly, Vijverberg (1993) posed two questions: the first one, do women in the labor market enjoy the same returns to their human capital investments as men do? The second one, is the different treatment of women in the labor market a cause for the lower educational attainment so often observed among women in the Third World? He found that overall labor market returns to education are generally higher for women. However, they also found that women are less likely to hold wage jobs than men. Therefore, they attributed the lower education level among women not to rate of return but to sex discrimination. 5
In a developing country, Pakistan, Aslam (2007) studied the rates of return to education by gender. The author explained the large gender gaps in education in Pakistan according to the differential labor market returns to male and female education. Then he empirically tests this explanation; the findings show a sizeable gender asymmetry in economic returns to education, with returns to women s education being substantially and statistically significantly higher than men s. These results could be attributed to the reason that females have significantly higher economic incentives to invest in education than males. However, the author concluded that the total labor market returns are much higher for men, despite returns to education being higher for women. In another developing country, urban India, Kingdon and Unni (2001) investigated to what extent is education responsible for the differential labor market outcomes of women and men. According to them women has lower labor force participation and earnings than men, so they tried to figure out the extent to which education contributes to this and whether this gender wage differential is attributed to men and women s differential educational endowments or to labor market discrimination. Their finding, for the Indian urban labor market, suggested that women do suffer high levels of wage discrimination. However, education contributes little to this discrimination. They also found that returns to education rise with education level, for both men and women. Across Europe, returns to education somewhat differ, with the Scandinavian countries (Norway, Sweden and Denmark) and the Netherlands lowest, and Ireland and the UK highest. West Germany, Portugal and Switzerland are in-between countries (Harmon et al, 2001). Furthermore, the authors found that for some countries like the UK, Ireland, Germany, Greece and Italy there is a large difference in returns between gender (returns to women are significantly higher than returns to men). 6
No substantial gender differences were found in Portugal according to Pereira and Martins (2001). Also the authors revealed high and increasing rates of return to education in Portugal. In the year 1982 it was above 9% and reach up to 13% by the end of the period considered (1995). Also, No substantial gender differences were found. Bonjour et al, (2002) used a sample of UK female identical twins to estimate private economic returns to education. They found that a private return to education for women of 7.7%. Also, they show that smoking reflects family background. Therefore, smoking behavior should not be used as an instrument for education. As can be seen, many explanations were given to the gender education earning gap. Some attribute it to the early educational choices, other to socialization, job characteristics, foreign language proficiency, computer skills, discrimination or even because females have significantly higher economic incentives to invest in education than males. Data and methodology: The data which intended to be used in this study are planned to be taken from the central bureau of statistics in Syrian Arab republic. Also, a survey will be conducted. Limitations of the study: As all studies suffer from certain limitation, the availability of data in this study may cause some diversion in the study direction from the planned one. References 7
Aslam, M., (2007) Rates of Return to Education by Gender in Pakistan. Global Poverty Research Group GPRG-WPS-064. Bonjour, D., Cherkas, L., Haskel, J., Hawkes, D., and Spector, T., (2002) Returns to education: evidence from UK twins, Labour Economics, CEPR (central of economic policy research), April 2002. Chevalier, A., (2003) Motivation, Expectations and the Gender Pay Gap for UK Graduates, Institute for the Study of Social Change, University College Dublin. GARCI A-ARACIL, A., (2007), Gender Earnings Gap among Young European Higher Education Graduates, Higher Education, 53: 431 455. Harmon, C, Walker, I. and Westergaard-Nielsen, N (2001) Education and Earnings in Europe A Cross Country Analysis of Returns to Education, Edward Elgar, Cheltenham. Kingdon, G. G., and Unni J., (2001) Education and Women s Labour Market Outcomes in India, Education Economics, 9 (2), 2001. Machin, S., and Puhani, P., (2003) Subject of Degree and the Gender Wage Differential: Evidence for the UK and Germany, Economics Letters, 79(3): 393-400. Pereira, p. T., and Martins, P. S., (2001) Returns to Education in Portugal, 1982 1995: High and Rising. in Colm Harmon, Ian Walker and Niels Westergaard-Nielsen (eds), Education and Earnings in Europe: A Cross Country Analysis of the Returns to Education. Edward Elgar, March 2001. Psacharopoulos, G., Ng Ying, C., (1994) Earnings and education in Latin America, Education Economics, 2(2):187-207. Vijverberg, W., (1993) Educational Investments and Returns for Women and Men in Cote d'lvoire, THE JOURNAL OF HUMAN RESOURCES, 28 (4): 933. 8