Working paper

What drives the gender wage gap?: Examining the roles of sorting, productivity differences, and discrimination.

29 Aug 2017
CREATORS
The study by researchers at Motu Economic and Public Policy found that men and women were statistically indistinguishable in how much value they add to their firms, but the average woman was paid only 84 cents for every $1 for the average man.

Description

Women are paid less,
but aren’t less valuable.
We blame sexism.

As in other OECD countries, women in New Zealand earn substantially less than men with similar observable characteristics. In this paper, we use a decade of annual wage and productivity data from New Zealand’s Linked Employer-Employee Database to examine different explanations for this gender wage gap. Sorting by gender at either the industry or firm level explains less than one-fifth of the overall wage gap. Gender differences in productivity within firms also explain little of the difference seen in wages. The relationships between the gender wage-productivity gap and both age and tenure are inconsistent with statistical discrimination being an important explanatory factor for the remaining differences in wages. Relating across industry and over time variation in the gender wage-productivity gap to industry-year variation in worker skills, and product market and labour market competition, we find evidence that is consistent with taste discrimination being important for explaining the overall gender wage gap. Explanations based on gender differences in bargaining power are less consistent with our findings.

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PUBLICATION DETAILS

Resource Type: 
Identifiers: 
eISSN
1176-2667
APO URI: http://apo.org.au/node/105501
Volume: 
17
Issue: 
15
Pagination: 
45
Alternative Title: 
Motu Working Paper 17-15
Publication Place: 
Wellington, New Zealand
Series Title: 
Motu Working Papers
Series Volume/No.: 
17-15
Language: 
License Type: 
CC BY