4 Results
Two versions of equation (1) were estimated (without and with hours of work, occupation and industry). The estimates of the second of these are summarised in Tables 2a-2d. Including hours of work, occupation and industry led to a significant decrease in the coefficients on education.[9] This supports the hypothesis that the positive effect of education on income is partly through improved access to better-paid occupations and industries, and higher hours of work. This effect is relatively stronger for the Maori and ‘Other’ ethnic groups than for the European and Part-Maori groups.[10]
It is interesting to note that while ‘hours of work’ has a positive effect for all ethnic groups in both years, this significantly increased in 1996 relative to 1986. The results in Tables 2a-2d also show that ‘locality’ has a statistically significant influence on ethnic income differentials. For example, Maori males residing in rural areas had the greatest disadvantage in income levels, compared to all other ethnic groups.
In addition, while European and Part-Maori males and all females had relatively higher income levels if residing in a major urban area and compared to a semi-urban area, Maori males did not show such an advantage (the same is true for the ‘Other’ ethnic group). This indicates that the relatively higher proportion of Maori males resident in semi-urban areas is consistent with income incentives as estimated in this study. By the same token, these results indicate that Maori males residing in ‘major urban’ and ‘rural’ areas were engaged in employment resulting in relatively lower income returns.[11]
Overall, the result of adding the new set of variables in the econometric estimations indicates that the link between educational attainment and income is partly through access to certain highly demanded occupations, and greater hours of work. It also shows that, other things equal, Maori males earn higher incomes in ‘semi urban’ locations (where Maori are most concentrated), and those living in rural locations are the most disadvantaged of any group.
| Males | Females | |||
|---|---|---|---|---|
| Intercept | 1986 | 1996 | 1986 | 1996 |
| 8.9329 | 8.7321 | 8.1840 | 8.4494 | |
| (-326.95) | (-225.61) | (-175.73) | (-168.81) | |
| Highest qualification: | ||||
| School Certificate | 0.0822 | 0.1296 | 0.0718 | 0.1266 |
| (-8.63) | (-9.31) | (-4.88) | (-7.59) | |
| U.E./Sixth Form Cert. | 0.1541 | 0.2497 | 0.1626 | 0.2644 |
| (-9.32) | (-13.77) | (-7.75) | (-12.90) | |
| Bursary | 0.1839 | 0.1936 | 0.0656 | 0.0885 |
| (-5.05) | (-6.70) | (-1.28) | (-2.52) | |
| Diploma | 0.2267 | 0.2364 | 0.2524 | 0.2703 |
| (-29.60) | (-16.69) | (-16.15) | (-14.42) | |
| Bachelor's degree | 0.3864 | 0.3482 | 0.4269 | 0.4903 |
| (-8.21) | (-8.15) | (-7.48) | (-12.46) | |
| Postgraduate | 0.4778 | 0.6497 | 0.3189 | 0.729 |
| (-10.62) | (-11.97) | (-2.85) | (-13.54) | |
| Hours worked (per week) | 0.0056 | 0.0105 | 0.0189 | 0.0141 |
| (-19.17) | (-25.94) | (-31.74) | (-31.54) | |
| Married | 0.1478 | 0.1740 | -0.1436 | -0.1069 |
| (-23.09) | (-17.29) | (-12.25) | (-8.45) | |
| Major urban | -0.0321 | 0.0004 | 0.0675 | 0.1043 |
| (-4.38) | (-0.04) | (-5.21) | (-6.99) | |
| Rural | -0.0933 | -0.0945 | -0.0545 | -0.0495 |
| (-9.44) | (-9.62) | (-2.83) | (-2.37) | |
| Experience | 0.04275 | 0.06325 | 0.03044 | 0.05259 |
| (-39.03) | (-36.34) | (-124.84) | (-25.79) | |
| Experience2 | -0.00079 | -0.00111 | -0.00047 | -0.00089 |
| (-32.70) | (-30.88) | (-12.3) | (-20.47) | |
| F | 358.07 | 275.86 | 213.81 | 203.44 |
| Sample size | 28,659 | 18,219 | 16,898 | 13,241 |
Dependent variable: the natural logarithm of annual income Specification includes one digit occupation and industry dummies. Least squares regression coefficients (t-ratios based on White consistent standard errors)
| Males | Females | |||
|---|---|---|---|---|
| Intercept | 1986 | 1996 | 1986 | 1996 |
| 8.8399 | 8.6738 | 7.9040 | 8.3508 | |
| (168.05) | (215.38) | (86.28) | (152.28) | |
| Highest qualification | ||||
| School Certificate | 0.0690 | 0.1202 | 0.0659 | 0.0959 |
| (4.09) | (8.45) | (2.64) | (5.59) | |
| U.E./Sixth Form Cert. | 0.1258 | 0.1991 | 0.1585 | 0.1825 |
| (5.33) | (11.88) | (4.98) | (9.23) | |
| Bursary | 0.0731 | 0.0501 | 0.1521 | 0.0458 |
| (1.69) | (2.14) | (2.63) | (1.74) | |
| Diploma | 0.2422 | 0.2504 | 0.2308 | 0.2528 |
| (18.02) | (18.66) | (8.26) | (14.01) | |
| Bachelor's degree | 0.3926 | 0.4424 | 0.4490 | 0.3553 |
| (10.31) | (16.70) | (7.24) | (11.87) | |
| Postgraduate | 0.4444 | 0.5954 | 0.4159 | 0.5229 |
| (7.04) | (17.14) | (5.81) | (12.12) | |
| Hours worked (per week) | 0.0049 | 0.0111 | 0.0208 | 0.0170 |
| (8.49) | (26.75) | (21.29) | (36.93) | |
| Married | 0.1772 | 0.1502 | -0.2083 | -0.1480 |
| (13.27) | (14.17) | (9.88) | (11.90) | |
| Major urban | -0.0070 | 0.0580 | 0.0497 | 0.1488 |
| (0.52) | (4.67) | (2.08) | (9.67) | |
| Rural | -0.1028 | -0.0726 | -0.0476 | 0.0383 |
| (5.11) | (4.19) | (1.33) | (1.73) | |
| Experience | 0.04762 | 0.06839 | 0.04108 | 0.05432 |
| (23.58) | (39.24) | (15.24) | (28.94) | |
| Experience2 | -0.00089 | -0.00128 | -0.00073 | -0.00095 |
| (18.98) | (32.74) | (11.04) | (21.95) | |
| F | 157.05 | 370.19 | 86.98 | 276.80 |
| Sample size | 8,173 | 17,128 | 6,007 | 15,136 |
Dependent variable: the natural logarithm of annual income Specification includes one digit occupation and industry dummies. Least squares regression coefficients (t-ratios based on White consistent standard errors)
| Males | Females | |||
|---|---|---|---|---|
| Intercept | 1986 | 1996 | 1986 | 1996 |
| 8.9331 | 8.8250 | 8.1418 | 8.5343 | |
| (1033.34) | (836.09) | (545.03) | (592.14) | |
| Highest qualification | ||||
| School Certificate | 0.0473 | 0.0704 | 0.0620 | 0.0826 |
| (15.59) | (18.03) | (14.27) | (17.39) | |
| U.E./Sixth Form Cert. | 0.0840 | 0.1354 | 0.0925 | 0.1475 |
| (22.35) | (30.97) | (16.88) | (27.00) | |
| Bursary | 0.0249 | -0.0434 | 0.0366 | -0.0706 |
| (3.63) | (7.00) | (3.53) | (9.31) | |
| Diploma | 0.1784 | 0.1561 | 0.1614 | 0.1788 |
| (83.42) | (48.19) | (36.55) | (37.26) | |
| Bachelor's degree | 0.3303 | 0.3440 | 0.2832 | 0.2853 |
| (67.55) | (64.49) | (32.81) | (42.13) | |
| Postgraduate | 0.4077 | 0.4691 | 0.3688 | 0.4371 |
| (74.45) | (73.49) | (35.34) | (52.18) | |
| Hours worked (per week) | 0.0050 | 0.0107 | 0.0224 | 0.0206 |
| (48.36) | (97.38) | (136.66) | (165.75) | |
| Married | 0.1479 | 0.1443 | -0.1983 | -0.1677 |
| (69.64) | (55.07) | (63.36) | (55.60) | |
| Major urban | 0.0506 | 0.0847 | 0.0788 | 0.1208 |
| (22.04) | (27.55) | (19.16) | (29.61) | |
| Rural | -0.0763 | -0.0356 | -0.0423 | 0.0378 |
| (21.76) | (8.08) | (6.78) | (6.43) | |
| Experience | 0.04306 | 0.06117 | 0.02375 | 0.04219 |
| (139.92) | (149.89) | (55.83) | (89.15) | |
| Experience2 | -0.00077 | -0.00111 | -0.00032 | -0.00068 |
| (120.46) | (131.88) | (33.42) | (65.94) | |
| F | 6574.08 | 6229.73 | 3687.49 | 4764.87 |
| Sample size | 335,632 | 281,246 | 228,523 | 234,079 |
Dependent variable: the natural logarithm of annual income Specification includes one digit occupation and industry dummies. Least squares regression coefficients (t-ratios based on White consistent standard errors)
Notes
- [9]Incremental F tests based on the two specifications imply that the combined effect of the added variables is statistically significant, with P values smaller than 0.01.
- [10]The usual relevant adjustments are made to interpret the coefficients as a percentage gain in income in relation to dichotomous (binary) variables for educational qualifications, given the semi-logarithmic functional forms of the ‘earnings functions’ (see e.g. Halvorsen and Palmquist, 1980). For example, the percentage gain in income from an education level is derived as: gj = [ exp (bj) - 1 ] times 100, where gj reflects the percentage gain relating to this education level, and bj is the regression coefficient..
- [11]It is interesting that for Australia, Daly (1993) did not find a significant difference in the probability of employment for rural and urban Aborigines, which she expected to reflect the effect of the Community Development Employment Project (CDEP) scheme in creating ‘employment’ in remote areas at the time of the 1986 Census.
