Income distribution and labour market discrimination

Abstract

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This thesis contains two studies. The first study investigates the income distribution among Namibian households. The second study examines the differences in earnings between males and females in the Namibian labour market. In both studies we use the 1993/1994 Namibia Household Income and Expenditure Survey

The aim of the first study is to investigate what socio-economic variables that affect the Namibian income distribution. To measure this we use the Gini coefficient. To investigate the extent to which total income inequality is due to iwithin-group/i inequality or ibetween-group/i inequality we use both Theilo's (1967) entropy index T and Theil's second measure L. Income inequality is much more pronounced in the Central/southern region than in the North/north-east region. The iwithin-group/i inequality seems to be the principal determinant of total inequality. Education and main source of income are important variables in determining degrees of ibetween-group/i inequality. We find that Namibia still suffers from a skewed income distribution

The aim of the second study is to examine the differences in earnings between males and females in manufacturing, service and public sector. The estimated earnings differences are decomposed into endowment and discrimination components using techniques by Oaxaca (1973) and Oaxaca and Ransom (1994). Comparing Heckman's (1979) two-stage estimation procedure with ordinary least square estimates we find that accounting for selection does not affect the endowment component, but do affect the discrimination component. We also find that females have a productivity advantage over the males, which reduces the gross wage differential