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

Author

Listed:
  • Sin, Isabelle
  • Stillman, Steven
  • Fabling, Richard

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.

Suggested Citation

  • Sin, Isabelle & Stillman, Steven & Fabling, Richard, 2017. "What drives the gender wage gap? Examining the roles of sorting, productivity differences, and discrimination," Motu Working Papers 290511, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:290511
    DOI: 10.22004/ag.econ.290511
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    Cited by:

    1. Li, Jiang & Dostie, Benoit & Simard-Duplain, Gaëlle, 2020. "What Is the Role of Firm-Specific Pay Policies on the Gender Earnings Gap in Canada?," IZA Discussion Papers 13907, Institute of Labor Economics (IZA).
    2. is not listed on IDEAS
    3. Strittmatter, Anthony & Wunsch, Conny, 2021. "The Gender Pay Gap Revisited with Big Data: Do Methodological Choices Matter?," IZA Discussion Papers 14128, Institute of Labor Economics (IZA).
    4. Izaskun Barba & Belen Iraizoz, 2020. "Effect of the Great Crisis on Sectoral Female Employment in Europe: A Structural Decomposition Analysis," Economies, MDPI, vol. 8(3), pages 1-24, August.
    5. Moeeni, Safoura & Wei, Feng, 2022. "The labor market returns to unobserved skills: Evidence from a gender quota," CLEF Working Paper Series 53, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    6. Jiang Li & Benoit Dostie & Gaëlle Simard-Duplain, 2023. "Firm Pay Policies and the Gender Earnings Gap: The Mediating Role of Marital and Family Status," ILR Review, Cornell University, ILR School, vol. 76(1), pages 160-188, January.
    7. Christine Wiedman, 2020. "Rewarding Collaborative Research: Role Congruity Bias and the Gender Pay Gap in Academe," Journal of Business Ethics, Springer, vol. 167(4), pages 793-807, December.
    8. Fanfani, Bernardo, 2022. "Tastes for discrimination in monopsonistic labour markets," Labour Economics, Elsevier, vol. 75(C).
    9. Isabelle Sin & Bronwyn Bruce-Brand, 2019. "Is the pay of medical specialists in New Zealand gender biased?," Motu Working Papers 19_21, Motu Economic and Public Policy Research.
    10. Richard Fabling & Arthur Grimes, 2019. "Ultra-fast broadband, skill complementarities, gender and wages," Motu Working Papers 19_23, Motu Economic and Public Policy Research.
    11. Shakked Noy & Isabelle Sin, 2021. "The Drivers of Mothers' Parental Leave Decisions: Evidence from the Growing Up in New Zealand longitudinal survey," Motu Working Papers 21_08, Motu Economic and Public Policy Research.
    12. T. C Lamprea-Barragan & A. F. GarcÔøΩa- Suaza, 2021. "Decomposing the Gender Pay Gap in Colombia: Do Industry and Occupation Matter?," Documentos de Trabajo 19437, Universidad del Rosario.
    13. Byker, Tanya & Malik, Sara & Patel, Elena & Sandvik, Jason, 2025. "Board Gender Diversity and Workforce Composition, Compensation, and Retention for U.S. Publicly Traded Firms," IZA Discussion Papers 18125, Institute of Labor Economics (IZA).
    14. Benny, Liza & Bhalotra, Sonia & Fernández, Manuel, 2021. "Occupation flexibility and the graduate gender wage gap in the UK," ISER Working Paper Series 2021-05, Institute for Social and Economic Research.
    15. Allan, Corey & Maré, David C., 2021. "Do Workers Share in Firm Success? Pass-through Estimates for New Zealand," IZA Discussion Papers 14764, Institute of Labor Economics (IZA).

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    Keywords

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    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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