Reducing Gender Wages Inequality in Indonesia

Abstract

Education is an indicator of advanced development, as education produces high quality human resources. However, the existence of gender gap in society causes low participation of women in education compared to men. This phenomenon happens due to various factors such as government policy, socio-economic, and culture. As such, this study aims to estimate the rate of return of genderbased school in Indonesia using Mincer earnings function. This study uses database Indonesia Family Life Survey (IFLS) 4 and 5. The two-step Heckman model of ordinary least square (OLS) is used for data analysis. The findings of this study are as follows. First, return to schooling is higher for male than female, for both service and manufacturing industries. Second, years of schooling, years of schooling interaction with manufacturing industril, years of schooling interaction with in service industril, the squared years of schooling interaction with manufacturing industril, the squared years of schooling interaction with service industril, gender interaction with service industril, gender interaction with manufacturing industril and urban/rural location are significantly influence return to schooling. While, squared years of schooling is not significantly influence return to schooling.