Inequality in Malaysia: Empirical Questions, Structural Changes, Gender Aspects

Abstract:Malaysia has consistently placed high priority on reducing income inequality, particularly between ethnic groups, with increasing emphasis in recent years on national—rather than intergroup—inequality, exclusion of low-income households, and gender disparity. Official statistics show steeply declining household income inequality in recent years, and a marginal gender wage gap, but further investigation finds different trends and more nuanced pictures. This paper presents alternative findings that pose questions about the official account. Computing estimates of wage distribution, the study finds moderate changes in inequality, with relatively higher wage growth at the top and bottom ends—managers, production and elementary workers—while professionals, skilled workers and service workers have experienced slower gains. Shifts in Malaysia's economic structure and labour markets are consistent with the modest changes in inequality that are observed, and somewhat confound the drastic drop plotted in official sources. On gender inequality, women's rapidly increased educational attainment and steadily rising labour participation have bolstered their economic standing, and may account for the surprisingly low average male-female wage disparity. However, when disaggregated by occupation, age group, and employment status, substantial gender gaps are observed. Malaysia's efforts to redress inequality warrant more rigorous analyses and systematic policies.