4.4 Adjustment for combined compositional and excluded effects
One of the goals of this investigation is to determine the relative contribution of these effects on the overall difference between New Zealand and the OECD average. Some of those we have been able to, in part, quantify. Here we combine the effects of type of degree, new migrants, and post-2010 tax rates. We also include employment effects and impact of student loans (see Appendix A for details).
The results (Figure 18) show that these combined adjustments explain 42% of the gap for males, and 79% of the gap for females. The combined effects do not include all factors. We also note that some of the factors discussed above (for example type of degree) may incorporate other effects (duration of degree, hours of work, learning on the job and pathways to continued learning). In addition, they can further interact together, or with additional factors that affect the index through earnings (eg, industry mix and firm size). However, the combined effects presented help summarise the overall magnitude of measurable effects.
In addition, by incorporating the impact of New Zealand's higher relative employment rate noted in Appendix 0 (15% of the gap for men and 17% of the gap for women) the combined effect closes a total of 57% of the New Zealand OECD gap for males, and 96% of the gap for females.
- Figure 16 - Contribution of combined effects to the difference between New Zealand's returns and the OECD average
- Source: Authors decompositions, using OECD data
