Gender wage gaps in Ghana: a comparison across different selection models

The wage of an individual is observed only when he/she is employed. However, getting employment requires two decisions. First, an individual has to decide to participate in the labor market, and the second is the decision of an employer to hire that individual. Since female labor market participation often differs from men, and employers’ decisions to hire may also be influenced by gender, it is appropriate to account for this double-header selection process. Our results indicate that women on average receive lower wages than men regardless of the type of sample correction procedure used for the analysis. We find that the gender wage gap is smaller among formal wage employees and the gap decreases as the education level increases. The significant differences in the point estimates of the different selection correction are an indication that failure to use the right sample correction procedure may possibly lead to an inconsistent coefficient estimate.