Ethnic wage differences in Aotearoa New Zealand

Ethnic wage gaps are a substantial and persistent issue in New Zealand.

Understanding the drivers of such gaps is key to understanding the economic, social, and institutional factors that contribute to labour market inequality and to identifying measures to reduce gaps.

Using household survey data from 2009 to 2023, this study implements a version of the Oaxaca-Blinder decomposition method to examine the sources of ethnic wage gaps in New Zealand.

Our results confirm the pattern of disadvantage previously documented for non-European ethnic groups. Differences in demographic, educational, and job characteristics account for substantial portions of the wage gaps for Māori, Pacific, and European groups. After accounting for differences in mean characteristics, sizeable wage gaps remain, providing insight into the degree of ethnic labour market disadvantage that is due to unobservable characteristics or broader systemic factors.

Citation

Thomas Benison and David C Maré. "Ethnic wage differences in Aotearoa New Zealand.” Motu Working Paper 25-06. Motu Economic and Public Policy Research. Wellington, New Zealand