AN EMPIRICAL INVESTIGATION OF THE DETERMINANTS OF WAGE DIFFERENTIALS IN NIGERIA

AN EMPIRICAL INVESTIGATION OF THE DETERMINANTS OF WAGE DIFFERENTIALS IN NIGERIA

ABSTRACT

This study examines the determinants of wage differential in Nigeria. The contribution of wage differential or inequality to total income inequality in Nigeria cannot be under-estimated. This goes without saying that the gross income inequality reckoned in Nigeria could be reduced by tackling the wages disparity. To do this, the study designs three main objectives; to ascertain the impact of education and experience on wage differential in Nigeria, to ascertain the relationship that wage have with experience and education in Nigeria and to analyse income inequality with respect to socioeconomic characteristics namely; sex, state and sector in Nigeria. The study therefore employs the instrumental variable approach with the aid of the General Household Survey (GHS) Data (2019) to ascertain the above stated objectives. The result suggests that education, experience and potential experience are significant determinants of wages rates and hence significant contributors to wages differential. Amongst the socio-economic characteristics the result suggests that location and sex are non-significant determinants of wage rates. While marital status is a significant determinant of wage rates and hence significantly influences wage differentials.

Keywords: Wage, Differential, Inequality, Determinants, Nigeria.