Ceilings or floors? A decomposition analysis of the gender pay gap by education in Kenya

Alwago, Wycliffe Obwori (2025) Ceilings or floors? A decomposition analysis of the gender pay gap by education in Kenya. HUNGARIAN STATISTICAL REVIEW, 8 (2). pp. 135-182. ISSN 2630-9130

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Abstract

This study investigates gender pay differences in Kenya, emphasizing the role of educational attainment in shaping earnings’ disparities. Using data from the Kenya Continuous Household Survey 2021, the analysis employs quantile regression techniques and the Machado and Mata (2005) decomposition method to examine earnings gaps across the earnings distribution. Results reveal stark contrasts between low-educated and highly educated women. Low-educated women face substantial pay penalties, particularly in the median quantiles (24.9–66.7%), with evidence of a “sticky floor” effect as they are disproportionately concentrated in low-paying occupations. In contrast, highly educated women experience smaller but persistent gaps (8.3–28.9%), peaking at the top deciles and reflecting a “glass ceiling” effect linked to vertical occupational segregation. Counterfactual decomposition shows that differences in returns to productivity-related characteristics – a proxy for discrimination and unobserved factors – drive the gap for highly educated workers, while low-educated women’s penalties stem from occupational segregation and undervalued endowments. Notably, counterfactual scenarios suggest compensating women at male earnings rates would reverse the gap, favoring women across all education levels. The findings underscore the need for targeted policies: addressing horizontal segregation and earnings transparency for low-educated women, and dismantling barriers to high-paying roles for highly educated women.

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