Earnings inequality and gender in New Zealand, 1998–2008

Abstract

This paper applies a simple method for decomposing changes in inequality to earnings data from the New Zealand Income Survey and extends it to analyse changes in inequality between men and women. Earnings inequality rose among both males and females between 1998 and 2008. In both cases, the majority of this is unexplained by changes in the observed determinants of earnings; however, shifts in characteristics and the returns to those characteristics are also found to have large effects. Overall, there is evidence that male and female wage distributions are converging, although both are becoming more dispersed.

Keywords:

• wage inequality
• gender
• labour force structure

Acknowledgements

The author would like to thank the New Zealand Department of Labour for providing access to the Income Survey data used and, in particular, Steve Stillman and Sylvia Dixon for their advice and assistance with coding. Helpful comments were also received from Gary Fields, Larry Kahn and Dave Maré. Access to the official data used in this study was granted by Statistics New Zealand under conditions designed to give effect to the confidentiality provisions of the Statistics Act 1975. The results presented in the paper are the work of the author, not Statistics New Zealand.

Notes

 1. O'Dea (2000) provides an exhaustive summary of studies of the changes in New Zealand's income distribution up to that time.

 2. See Gang and Yun (2003) for a convenient explanation of this method.

 3. Note that this implies that .

 4. The Income Survey series is not strictly comparable with the Household Economic Survey series as the latter has a much smaller sample size. In addition, Dixon documented evidence that the Household Economic Survey features a considerably higher fraction of employees working long weekly hours than the Income Survey.

 5. The 1997 data were avoided due to concerns about their quality, given that this was the first year of the Income Survey.

 6. In the analysis of the following section, 21 observations are excluded from the sample due to missing values for the control variables.

 7.  Table 1 uses Statistics New Zealand's hierarchical method of classifying ethnic groups; however, a full set of mixed major ethnic group variables is included in the regressions in the next section.

 8. The appendix provides a full description of the education, ethnic group, industry, occupation and region variables that were used.

 9. Maani focused on the employed, which includes the self-employed as well as wage and salary earners, and she used annual income instead of hourly earnings.

10. The average proportion of males over the two years was used as the value for p in equation (5).