This study analyzes wage disparities in Sri Lanka’s formal sector. Drawing from household survey data from the Sri Lanka Integrated Survey 1999-2000, the extent of the wage earning disparities have been examined in the context of gender and ethnic differences. The study is structured with an introduction, description of the unconditional differences between various productive factors and labour markets by gender and ethnicity, analyzes of the determinants of log hourly wages, and finally, the Oaxaca decomposition where appropriate.