Some notes on measuring pay gaps

How big are pay gaps

for women and ethnic groups?

Measurement matters.

The formula for measuring the gender pay gap is widely used and generates internationally comparable measures.

It measures how much lower women’s pay is than men’s, as a proportion of men’s pay.

The size of the gender gap is not directly comparable with the size of inter-ethnic gaps because inter-ethnic gaps are generally measured as a proportion of a different group’s pay (not that of men).

These notes discuss choices and issues that arise when defining pay gaps among more than two groups. It discusses both the formula used for calculating pay gaps and the choice of pay measure. When examining pay gaps by ethnicity, there are several plausible ways of choosing a comparator (pay compared with what?) and a scale (as a proportion of what?).

Citation

Maré, Dave and Lyn Brieseman, 2025. Some notes on measuring pay gaps. Motu Note 55