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A simple way to (almost) halve the gender pay gap

Last week’s New Zealand Income Survey sure led to a lot of headlines. Here are some of them:

One simple change could almost halve measured pay inequality. What is it? Have women replicate men’s split between full-time and part-time work. Ok, maybe that’s not so simple. But while there are 7.05 full time male workers for every part-time male worker, there are 1.96 full time female workers for every part-time female workers. And part-timers always earn less than full-timers. Interestingly enough, part-time female workers earn more than part-time male workers – for the obvious reason given those numbers.

If you re-weighted the pay gap using women’s median earnings for full-time and part-time work, but men’s split between full-time and part-time work, the pay gap would drop from 11.9% to 6.6%. And that’s without controlling for a pile of other important stuff, like time spent outside of the workforce or differences in education background and the like.

How is this different from last year? Last year’s wage gap was 9.8%. In the 2014 NZIS, there were 6.65 full time male workers for every part-timer and 2.02 full-time female workers for every part-timer. So the proportion of male workers in full time positions increased while the proportion of women in full-time positions decreased. The absolute number of part-time male workers dropped; the number of part-time female workers increased.

How big is the effect? It looks like the change in the relative proportions of part time and full time workers accounts for about a fifth of the increase in the wage gap from 2014 to 2015. The rest looks due to a much stronger increase in male full-time earnings than in female full-time earnings – though part-time male earnings have stagnated while part-time female earnings grew.

I wonder to what extent the employment push at the Ministry of Social Development might explain things. Work requirements apply more quickly to more women now than previously, and women facing work requirements will (on average) have worse employment characteristics than others in employment. And they would be disproportionately moving into part-time work.

The EEO Commissioner Jackie Blue had this to add:

“Our most marginalised group of workers – young women (aged 15-24) are paid less than half the average hourly wage of our least marginalised group of workers, Pakeha men (aged 45-64),” said Dr Blue.

A group with 30 years’ more experience earns more than double what’s earned by folks just starting out. There oughta be a law stopping that kind of thing.

Update: I have commented extensively at Offsetting Behaviour on the gender wage gap. Do hit that tag if you are interested. You may even there learn about the lesbian pay gap.

About Eric Crampton (87 Articles)
I'm Head of Research with the New Zealand Initiative.

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