The Multifaceted Dimensions of the Wage Gap in Ecuador

Abstract

This study examines the determinants of wage gap differences based on gender, ethnicity, and area of residence (urban vs. rural) in Ecuador for the years 2007 and 2017. By combining the Oaxaca-Blinder decomposition with unconditional quantile regression, we identify the extent to which the wage gap between two groups is due to characteristics (endowment) or unexplained factors at various points of the distribution, i.e. for low-, medium- and high-income workers. Results show that, on average, the gender and ethnic wage gap in 2017 increased slightly with respect to 2007, while the area wage gaps remained stable. However, progresses have mainly benefited those at the top of the income distribution, while disparities have widened for those at the bottom. As regards endowment effects, education mainly explains area and ethnicity wage gaps, while there is an important unexplained part that contributes more to gender wage differentials.