Abstract:
This study examines the rural–urban wage gap in Bangladesh using data from the Household
Income and Expenditure Survey (HIES) 2022. Applying the Oaxaca–Blinder decomposition
method, along with quantile decomposition and propensity score matching, we analyze the
extent to which differences in wages can be explained by observable characteristics such
as education, occupation, and sectoral affiliation, and how much remains unexplained. Results
reveal a significant wage premium for urban workers, with education and occupational
structure accounting for the largest share of the explained gap. However, a substantial unexplained
component persists, suggesting structural disadvantages for rural workers. These
findings have important policy implications for reducing spatial inequality, improving rural
education, skills development, and promoting inclusive economic growth in Bangladesh.
Keywords: Wage inequality, Human capital, Rural–urban gap, Labor markets in Bangladesh,
Oaxaca–Blinder decomposition, Quantile decomposition, Household Income and Expenditure
Survey (HIES) 2022.
JEL Codes: J31 (Wage Level and Structure; Wage Differentials), O15 (Human Resources;
Human Development; Income Distribution; Migration ), R23 ( Regional Labor Markets;
Neighbourhood Characteristics ),J24 (Human Capital; Skills; Occupational Choice; Labor
Productivity),C21 (Cross-Sectional Models; Quantile Regression; Decomposition Methods;
Treatment Effect Models)
Description:
This thesis submitted in partial fulfillment of the requirements for the degree of Bachelor in Economics of East West University, Dhaka, Bangladesh.
