# **1 Introduction**

The existence of a gap between male and female income is a persistent reality across the world. In order to formulate policies to bridge these gaps, it is useful to explore what may be causing the gaps. There is a large literature examing the gender income gap in developed countries like the United States. There is also a growing literature that goes beyond simple mean decompositions. For example, quantile decomposition methods were developed and applied in Gosling, Machin, and Meghir (2000) and Machado and Mata (2005). Such techniques reveal whether the size and determinants of earnings gaps vary at different points across the income distribution.

Our paper follows in the tradition of these two strains of literature by making use of a new decomposition approach developed in Firpo, Fortin, and Lemieux (2007) and applying this methodology to examine the gender income gap in five countries in Africa. To our knowledge this is the first paper that applies the Firpo, Fortin, and Lemieux (2007) methodology to examine the gender gap by quantile in these countries. Importantly, this methodology not only allows us to obtain aggregate decompositions of statistics beyond the mean, but further allows us to assess the contribution of individual covariates to the aggregate decomposition terms.

We specifically decompose the gender gap in self-employment income. This is particularly important given that workers in the developing world, particularly in SubSaharan Africa, are frequently self-employed. In fact, of the adults in Sub-Saharan Africa whose primary employment is not family farming, more workers (51.4%) work in household enterprises than for wages in public or private firms or in agriculture. Fox and Sohnesen (2012).<sup>1</sup> Indeed, in Sub-Saharan Africa, self-employment often constitutes the only alternative outside the agriculture sector. For example, in Uganda, despite impressive growth rates, the majority of the nonagricultural employment was created in household enterprises and microenterprises (Chuhan-Pole, Angwafo, Mapi Buitano, Korman, and Fox (2011)). Women are well- represented among these smaller size businesses: in Tanzania, for instance, 80 percent of micro entrepreneurs are female (Kweka and Fox (2011)). Thus, understanding the dynamics and the determinants of earnings among male and female entrepreneurs is crucial.

This paper focuses on the role of individual traits in explaining income in five SubSaharan countries: the Republic of Congo, Ghana, Rwanda, Uganda, and Tanzania. While the literature has already emphasized the role of individual traits–Jovanovic (1982), for example, looks at the role of experience on the decision to enter selfemployment while Fajnzylber, Maloney, and Rojas (2006) and Bates (1999) focus on the role of educational attainment on firm success– less attention has been paid to the contribution of specific traits to the gender income gap in these countries. To fill in this gap, we develop a new dataset that synthesizes data from National Household Surveys from the Republic of Congo, Ghana, Rwanda, Tanzania, and Uganda.

> 1Overall, 18 percent of respondents worked in household enterprise.

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