Heckman selection.

The focus of this study is the implications of structural transformation for gender equality, specifically equal pay, in Sub-Saharan Africa. While structural transformation affects key development outcomes, including growth, poverty, and access to decent work, its effect on the gender pay gap is not clear ex-ante. Evidence on the gender pay gap in sub-Saharan Africa is limited, and often excludes rural areas and informal (self-)employment. This paper provides evidence on the extent and drivers of the gender pay gap in non-farm wage- and self-employment activities across three countries at different stages of structural transformation (Malawi, Tanzania and Nigeria). The analysis leverages nationally-representative survey data and decomposition methods, and is conducted separately among individuals residing in rural versus urban areas in each country. The results show that women earn 40 to 46 percent less than men in urban areas, which is substantially less than in high-income countries. The gender pay gap in rural areas ranges from (a statistically insignificant) 12 percent in Tanzania to 77 percent in Nigeria. In all rural areas, a major share of the gender pay gap (81 percent in Malawi, 83 percent in Tanzania and 70 percent in Nigeria) is explained by differences in workers’ characteristics, including education, occupation and sector. This suggests that if rural men and women had similar characteristics, most of the gender pay gap would disappear. Country-differences are larger across urban areas, where differences in characteristics account for only 32 percent of the pay gap in Tanzania, 50 percent in Malawi and 81 percent in Nigeria. Our detailed decomposition results suggest that structural transformation does not consistently help bridge the gender pay gap. Gender-sensitive policies are required to ensure equal pay for men and women.