Using recent data, and a variety of econometric techniques, this study examines the gender pay gap in New Zealand. The need for this study arises as the information that is regularly cited on the pay gap (based on average or median earnings for males and females) does not control for differences in individual, household, occupation, industry or other job characteristics, and there has been a lack of robust analysis in NZ, based on data post-2003.
The study tells us about the factors behind the gender pay gap and helps us focus our efforts. It is the first comprehensive update of the factors behind the national gender pay gap since 2003.
Firstly, regardless of approach undertaken (e.g. parametric or semi-parametric) or whether or not we correct for selection into the labour force – the majority of the gender pay gap remains unexplained. The proportion of the average gap that is unexplained ranges from 64.4% to 83.4%.
Secondly, the size of the average gap ranges from 12.0 to 12.7%, and this is consistent with that found in Dixon (2003), indicating that the gender pay differential hasn’t narrowed in the last decade.
Finally, the size of the gap depends heavily on the location in the wage distribution – with clear evidence of little to no gaps at the bottom of the distribution, and large gender pay penalties (of approximately 20%) at the top end of the distribution. This is clear evidence pointing to a glass ceiling effect in NZ.