Occupational Segregation and Gender Wage Differentials: Evidence from Malaysia* Rahmah Ismail, Maryam Farhadi and Chung-Khain Wye Received 18 July 2013; accepted 6 September 2017 In Malaysia, the participation of women in the labor market has increased over time. However, occupational segregation and wage differentials continue to be prevalent between men and women in the labor market. The present paper investi- gates gender-related occupational segregation and wage differentials based on data collected from 7135 working households in Peninsular Malaysia in 2011. The wage decomposition model introduced by Brown et al. (1980) is used to examine the determinants of gender-related wage differentials. The results suggest that dif- ferences within occupations account for the largest portion of the wage gap between men and women. The results also indicate that wage discrimination within occupations plays an important role in the gender wage gap, while sample selection bias plays an important role in the examination of gender wage gaps. (JEL classification codes: J31, J70, J24) Keywords: gender wage differentials, occupational segregation, selectivity bias, wage decomposition, wage discrimination. doi: 10.1111/asej.12136 I. Introduction Several studies on wage differentials and inequality suggest that demand-side and supply-side factors are a possible explanation for wage gaps (e.g. Topel, 1997; Ueshima, 2003). However, gender wage differentials may exist despite the fact that men and women possess similar work-related characteristics due to dis- criminatory practices among employers. Employers may perceive female workers as being less productive, less creative and possessing lower leadership value. Such prejudices against female workers are supported by statistical data that shows that aggregate fertility rates tend to increase with the age of female workers, which may affect the work productivity of female employees (Yip and Wong, 2014). As a result, employment discrimination in hiring is related to the preconceived perceptions of employers on female employees with regard to their age, marital status and family obligations (Petit, 2007). *Rahmah: School of Economics, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, UKM Bangi, Selangor, Malaysia. Farhadi (corresponding author): Islamic Azad Univer- sity, Mobarakeh Branch, Department of Accounting, Isfahan, Iran. Email: farhadim58@gmail.com. Wye: School of Economics, Faculty of Economics and Management, Universiti Kebangsaan Malay- sia, UKM Bangi, Selangor, Malaysia. © 2017 East Asian Economic Association and John Wiley & Sons Australia, Ltd Asian Economic Journal 2017, Vol. 31 No. 4, 381–401 381