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Keywords:

  • Labor-market discrimination;
  • Earnings gap;
  • Ñopo method;
  • Dalit;
  • Nepal
  • J01;
  • J08;
  • J15;
  • J31;
  • J71

In this article, the monthly earnings gap between Dalit and non-Dalit caste members in Nepal is estimated using two methods: Blinder-Oaxaca decomposition method and the matching-based nonparametric decomposition method. The nonparametric decomposition method estimates the monthly earnings gap based on a one-to-many matching of the given income-generating characteristics, taking into account the differences in the support of the distribution of those characteristics for Dalits and non-Dalits. According to the results, the majority of the earnings gap between Dalits and non-Dalits is attributed to the endowment effect. Dalits earn less than non-Dalits because Dalits have some characteristics that non-Dalits do not, that are unfavorable in the labor market. That this endowment effect works against Dalits could be a reflection of the social exclusion and job segregation faced by Dalits in the past.