This study utilizes the 2007 Bangladesh Occupational Wage Dataset to investigate determinants of earnings and to estimate gender wage differentials in a large sample of non-agricultural workers in the country. The Mincerian regression model and Blinder-Oaxaca wage decomposition model are utilized to estimate and decompose the observed gender earnings gaps into the portion that can be explained by differences between women and men in their productive endowments (in factors such as education) and the portion that is unexplained, owing to differences in returns to these productive factors and due to other unknown effects. The paper presents the first estimates of hourly gender wage gaps by industry, level of education and establishment size that control for other characteristics of workers in Bangladesh and the first quantitative estimates of the effects of industrial and occupational segregation on average wage rates for women and men in the country. It also provides a thorough decomposition of industry level gender wage gaps into explained and unexplained components, which sheds light on the potential role played by gender-based discrimination in wage setting in different industries in Bangladesh.

The study finds that women earn an average of 21 per cent less per hour than men. Controlling for differences in age, educational background, industry, occupation and geographic location, yields an estimated gender wage gap of 15.9 per cent, but including the effects of industrial and occupational segregation into the estimate yields an estimated wage gap of 23.1 per cent. Industrial segregation increases the overall wage gap by an estimated 7 percentage points. Gender gaps are observed in every industry, across all levels of education and in every establishment size class, with the largest gaps observed in the hotels & restaurants and construction industries, among workers with primary education or less, and in mid-sized establishments. Gender-based occupational segregation increases the gender wage gap in the construction, financial intermediation and manufacturing industries, but mitigates it in the education, hotels & restaurants and other services industries. The results make clear that increased education has an important role to play to lower the gender wage gap in Bangladesh: the largest gender gap is observed among illiterate workers and the second largest gap is observed among literate workers with less than a primary school education.