Executive Summary

On average, male employees earn more than female employees. This effect is termed the "gender pay gap", conventionally expressed as the percentage difference in earnings between male and female employees. Since the 1970s the gender pay gap has been decreasing. Over the past 30 years, a significant amount of international work has attempted to explain the gender pay gap. Many studies have used the "Blinder-Oaxaca decomposition" method, the focus of this report. Industry and occupation have consistently been found to have major effects on the gender pay gap. Both factors tend to exhibit gender-segregation, with male employees tending to work in higher paid industries and occupations, with occupation having the largest effect.

The current study examines the New Zealand Public Service, coded within the industry division of Government Administration and Defence, analysing data for 2000 and 2001 separately. The gender pay gap was 16.61% in 2000, falling to 15.51% in 2001. When differences in human capital factors and employment characteristics were taken into account, the gap decreased to 4.7% for both years. That is, the adjusted earnings level for female employees was 95.3% of the average male earnings for both 2000 and 2001, once human capital and employment differences were accounted for.

The average male advantage in hourly earnings was $1.18 in 2000 and $1.17 in 2001. These figures equate to an average male earnings advantage of just over $2465 in annual base salary in 2000, and just over $2438 in 2001. The adjusted male advantages are $0.34 in hourly earnings ($703.11 gross annual salary) in 2000 and $0.35 hourly earnings ($732.89 gross annual salary) in 2001.

Consistent with previous research, occupation had the largest effect on the gender pay gap. Proportionately more male employees worked in higher paid occupations with proportionately more female employees in lower paid occupations. Where male and female employees worked in the same occupations, male employees tended to earn more. This may be due to male employees tending to hold more senior positions within occupations. On average, male employees were older and had longer tenure than female employees, although this difference in human capital had mixed effects. Male employees also had a different distribution across employers compared to female employees, again with mixed effects. There were similar proportions of male and female employees in ethnic minorities (non-New Zealand European ethnicities), with male minority employees appearing to average slightly higher earnings compared to female minority employees.

There were similar overall proportions of male and female employees employed in regions outside Wellington, and females employed in occupations outside Wellington averaged higher earnings than males employed in occupations outside Wellington. Fixed-term employment agreements provided slightly higher average earnings for male employees. There was a male earnings advantage of 10.4% in 2000 and 9.4% in 2001 for being on an individual agreement.

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