Heterogeneity in the Nigerian Labour Market: Exploring the Wage Gap

How does paid employment (public and private wage employments) differ from self-employment in Nigeria? Using the Nigerian cross-sectional General Household Survey (GHS) panel data of 2012, this doctoral thesis investigates the wage differences in the Nigerian public, private paid and self-employments. The Multinomial Logit Model (MLM); Bouguignon, Fourier and Gurgand (BFG) (2001) and Lee‘s (1983) models are used for estimating wage equations in order to investigate the determinants of wage differences within employment modes and among gender. The study evidences that human capital endowments are important determinants of wages in both employment modes; paid and self-employment. However within the paid employment (public and private) there appears to be no common wage determinants. While in public employment only geopolitical zones have a significant effect, in private employment, human capital endowments, marital status, gender, household size and urban rural division matters. On the other hand, in comparison to paid employment in private sector and self-employment they have more common determinants such as human capital characteristics and gender. Furthermore, the wage structure of the self-employed individuals differs by sector and occupation they are engaged in. These findings are in support of the findings of the recent studies on wage determinants as marital status and gender are significant determinants of wages in iv both, private paid employment and self-employment modes. Thus the analysis is extended to capture the impacts of gender and family attributes on wages. In this respect wage equations are estimated separately for males and females in both self and paid employment modes. The evidences suggest that marital status (being married) for both gender and employment modes increase the probability of having higher wages. On the other hand having more than three children decreases the log of odds ratio (the probability of having higher wages) relative to non-participation. The interaction term of being married and having children is negatively associated with female wages in SE. Findings therefore offer some policy inputs but also suggest the need for further research into the causes of the gender pay gap in self and paid employment. Keywords: Heterogeneity, Sectoral allocation, wage difference, self-employment, wage employment, Nigeria.