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

Author

Listed:
  • Sin, Isabelle

    (Motu Economic and Public Policy Research Trust)

  • Stillman, Steven

    (Free University of Bozen/Bolzano)

  • Fabling, Richard

    (Independent Researcher)

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 labor 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," IZA Discussion Papers 10975, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10975
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. Richard Fabling & Arthur Grimes, 2019. "Ultra-fast broadband, skill complementarities, gender and wages," Working Papers 19_23, Motu Economic and Public Policy Research.
    3. Strittmatter, Anthony & Wunsch, Conny, 2021. "The Gender Pay Gap Revisited with Big Data: Do Methodological Choices Matter?," Working papers 2021/05, Faculty of Business and Economics - University of Basel.
    4. Jiang Li & Benoit Dostie & Gäelle Simard-Duplain, 2020. "What is the Role of Firm-Specific Pay Policies on the Gender Earnings Gap in Canada?," CIRANO Working Papers 2020s-67, CIRANO.
    5. Corey Allan & David C Maré, 2021. "Do workers share in firm success? Pass-through estimates for New Zealand," Working Papers 21_15, Motu Economic and Public Policy Research.
    6. 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.
    7. Fanfani, Bernardo, 2022. "Tastes for discrimination in monopsonistic labour markets," Labour Economics, Elsevier, vol. 75(C).
    8. 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.
    9. 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.
    10. Isabelle Sin & Bronwyn Bruce-Brand, 2019. "Is the pay of medical specialists in New Zealand gender biased?," Working Papers 19_21, Motu Economic and Public Policy Research.
    11. Lamprea-Barragan, T. C & García- Suaza, A. F., 2021. "Decomposing the Gender Pay Gap in Colombia: Do Industry and Occupation Matter?," Documentos de Trabajo 19437, Universidad del Rosario.
    12. Shakked Noy & Isabelle Sin, 2021. "The Drivers of Mothers’ Parental Leave Decisions: Evidence from the Growing Up in New Zealand longitudinal survey," Working Papers 21_08, Motu Economic and Public Policy Research.

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    More about this item

    Keywords

    gender wage gap; discrimination; sorting; productivity; competition;
    All these keywords.

    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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