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Ethnic wage differences in Aotearoa New Zealand

Author

Listed:
  • Thomas Benison

    (Motu Economic and Public Policy Research)

  • David C. Maré

    (Motu Economic and Public Policy Research)

Abstract

Ethnic wage gaps are a substantial and persistent issue in New Zealand. Understanding the drivers of such gaps is key to understanding the economic, social, and institutional factors that contribute to labour market inequality and to identifying measures to reduce gaps. Using household survey data from 2009 to 2023, this study implements a version of the Oaxaca-Blinder decomposition method to examine the sources of ethnic wage gaps in New Zealand. Our results confirm the pattern of disadvantage previously documented for non-European ethnic groups. Differences in demographic, educational, and job characteristics account for substantial portions of the wage gaps for Māori, Pacific, and European groups. After accounting for differences in mean characteristics, sizeable wage gaps remain, providing insight into the degree of ethnic labour market disadvantage that is due to unobservable characteristics or broader systemic factors.

Suggested Citation

  • Thomas Benison & David C. Maré, 2025. "Ethnic wage differences in Aotearoa New Zealand," Motu Working Papers 25_06, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:25_06
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    References listed on IDEAS

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    1. Sholeh A. Maani, 2004. "Why Have Maori Relative Income Levels Deteriorated Over Time?," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 101-124, March.
    2. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    3. Carrington, William J & Troske, Kenneth R, 1998. "Interfirm Segregation and the Black/White Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 231-260, April.
    4. John Forth & Nikolaos Theodoropoulos & Alex Bryson, 2023. "The role of the workplace in ethnic wage differentials," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 259-290, June.
    5. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    6. James Heckman, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    7. New Zealand Treasury, 2018. "Statistical Analysis of Ethnic Wage Gaps in New Zealand," Treasury Analytical Papers Series ap18/03, New Zealand Treasury.
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    Cited by:

    1. Maré, David C. & Fabling, Richard, 2025. "Firms and Ethnic Wage Differences," IZA Discussion Papers 18206, Institute of Labor Economics (IZA).
    2. David C. Maré & Richard Fabling, 2025. "Firm productivity and ethnic wages," Motu Working Papers 25_08, Motu Economic and Public Policy Research.

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    Keywords

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    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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