Statistical Analysis of Ethnic Wage Gaps in New Zealand (AP 18/03)

Introduction

This paper estimates the contribution of differences in measured personal and job characteristics to New Zealand’s ethnic wage gaps. There are substantial and persistent gaps between the average hourly wages of Pākehā, Māori and Pacific employees. Survey estimates published by Statistics NZ show that the average hourly wage earned by Māori employees was 82% of the average hourly Pākehā wage in 2017, while the average wage earned by Pacific employees was 77% of the average Pākehā wage.

The purpose of the paper is to investigate the extent to which ethnic group differences in demographic, productivity-related or job characteristics may be contributing to the ethnic pay gaps. Treasury has produced this paper as one of its contributions to He kai kei aku ringa, the previous Government’s Māori economic development strategy.

Acknowledgements

A number of Treasury staff gave useful comments on earlier drafts of this paper. Any remaining errors are the sole responsibility of the authors.

Disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this report are strictly those of the authors. They do not necessarily reflect the views of the New Zealand Treasury, Statistics New Zealand or the New Zealand Government. The New Zealand Treasury and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in this Analytical Paper.

The results in this report are not official statistics, they have been created for research purposes from the Integrated Data Infrastructure (IDI) managed by Statistics New Zealand.

Access to the anonymised data used in this study was provided by Statistics NZ in accordance with security and confidentiality provisions of the Statistics Act 1975. Only people authorised by the Statistics Act 1975 are allowed to see data about a particular person, household, business or organisation and the results in this paper have been confidentialised to protect these groups from identification.

Careful consideration has been given to the privacy, security and confidentiality issues associated with using administrative and survey data in the IDI. Further detail can be found in the Privacy impact assessment for the Integrated Data Infrastructure available from www.stats.govt.nz.

The results are based in part on tax data supplied by Inland Revenue to Statistics NZ under the Tax Administration Act 1994. This tax data must be used only for statistical purposes, and no individual information may be published or disclosed in any other form, or provided to Inland Revenue for administrative or regulatory purposes.

Any person who has had access to the unit-record data has certified that they have been shown, have read, and have understood section 81 of the Tax Administration Act 1994, which relates to secrecy. Any discussion of data limitations or weaknesses is in the context of using the IDI for statistical purposes, and is not related to the data’s ability to support Inland Revenue’s core operational requirements.