Ethnic wage differences in Malaysia: parametric and semiparametric estimation of the Chinese-Malay wage gap

Abstract

Parametric and semiparametric estimated wage equations, which correct for sample selection bias, are used to assess the returns to eduction and extent of ethnic ‘discrimination’ in (Peninsular) Malaysia. In particular, this paper focuses on the level of ‘discrimination’ between Malay and Chinese men and women. The Andrews–Schafgans (1998) estimator is used to estimate consistently the wage equation intercept in the semiparametric case. The results show that the Chinese–Malay offered wage difference typically is larger in absolute value among women than men. The strong ‘discrimination’ favouring Chinese over Malays observed using the parametric results is negated by the semiparametric results