Foreign Capital Effects on Gender Wage Differentials in Indonesia

The good news first: The gender wage differential2 in Indonesia declined during the past fifteen years until the Asian financial crisis. Whereas in 1986 women’s monthly wages represented less than 60% of mens’ monthly wages, in 1997 this percentage had risen to more than 70%. The persisting gap has commonly been attributed to the typically longer experience, higher educational attainment and longer hours worked of male workers (Feridhanusetyawan/Aswicahyono 2001, ESCAP 1998, Manning 1998). However, for all levels of educational attainment female earnings remain lower than males. Additionally, the focus on human capital-related causes of gender wage differentials has been criticized for “blaming the victim”: for example, the gap in educational attainment itself being a result of discrimination both inside and outside the labour market (D’Amico 1987).