An Analysis of the Determinants of Wage and Salary Differentials in Bangladesh

Abstract

The Gini Index suggests that income inequality is a highly prevalent phenomenon in Southeast Asia (The World Bank, 2012a). As Zaman and Akita (2012) points out, differentials in income is especially prominent in Bangladesh. Our article investigates which factors create differentials in income in Bangladesh. Using data from the Household Income Expenditure Survey published by the Bangladesh Bureau of Statistics, we estimated two separate models—one for daily wage and one for annual salary. We found that education, age (which was used as a proxy for labour market experience), gender and place of work significantly brought about differentials in daily wage rates. We also observed that all four of the above variables, along with different types of occupations, caused differentials in annual salary. We conclude by making several policy recommendations to address these findings.