What Drives the Gender Wage Gap? Examining the Roles of Sorting, Productivity Differences, and Discrimination.

Motu Working Paper 17-15, Motu Economic and Public Policy Research (August 2017)

45 Pages Posted: 7 Sep 2017

See all articles by Isabelle Sin

Isabelle Sin

Motu Economic and Public Policy Research

Steven Stillman

Free University of Bozen-Bolzano; IZA Institute of Labor Economics

Richard Fabling

Motu Economic and Public Policy Research Trust

Multiple version iconThere are 2 versions of this paper

Date Written: August 2017

Abstract

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.

Keywords: gender wage gap; discrimination; sorting; productivity; competition

JEL Classification: J16, J31, J71

Suggested Citation

Sin, Isabelle and Stillman, Steven and Fabling, Richard Blaikie, What Drives the Gender Wage Gap? Examining the Roles of Sorting, Productivity Differences, and Discrimination. (August 2017). Motu Working Paper 17-15, Motu Economic and Public Policy Research (August 2017). Available at SSRN: https://ssrn.com/abstract=3032137 or http://dx.doi.org/10.2139/ssrn.3032137

Isabelle Sin (Contact Author)

Motu Economic and Public Policy Research ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Steven Stillman

Free University of Bozen-Bolzano ( email )

Via Sernesi 1
39100 Bozen-Bolzano (BZ), Bozen 39100
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Richard Blaikie Fabling

Motu Economic and Public Policy Research Trust ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

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