Firms and ethnic wage differences

This paper looks at how much the workplaces people are employed in explain the pay gaps between ethnic groups in Aotearoa New Zealand.

Using rich data that links workers and firms, the researchers estimated how much different jobs and different employers add to people’s pay. They adapted existing methods so the analysis works well for people who identify with more than one ethnicity.

The study finds the firms people work for explain only a very small part of the pay gap between ethnic groups. Most of the gap comes from differences in pay between workers of different ethnicities within the same workplace.

The findings highlight where future action matters most: not just which jobs people get, but what happens once they are in them.

Tackling pay gaps inside workplaces is key to building a fairer and more inclusive labour market.

Citation

David C Maré and Richard Fabling. "Firms and ethnic wage differences.” Motu Working Paper 25-07. Motu Economic and Public Policy Research. Wellington, New Zealand