Effects of Labor Reforms on Gender Disparities in Pay in the Formal Labor Market in Tanzania

Abstract

This study investigates the effect of the implementation of the Employment and Labor Relations Act in 2006 on gender inequalities in pay in the formal labor market in Tanzania. Using data from the Earnings and Employments Surveys before and after the enforcement of the reform, the study is able to construct panel data and estimate difference in difference models to map the effect on the average within-firm wage gap between women and men. In addition, the paper examines developments in gender differences in starting salaries on an individual level within firms, over a period after the labor reform. The main finding is a reduced average firm gender wage gap of 3.0-5.1 percent between 2005 and 2013 after controlling for sector, region, industry and firm size. The outcomes further suggest that for newly recruits employed at the same firm, the gender gap decreased by 9 percentage points between 2010 and 2013, however this can only be demonstrated during a period after the reform, possibly as a delayed effect of the legislation.