In a recent paper, we examined data on the universe of workers and firms in New Zealand to better understand why women earn less than men on average in a fairly progressive country even controlling for a wide range of characteristics, such as age, education, occupation and industry.

We examine four possible explanations:

1. Women work in industries and firms that pay everyone less;

2. Women are less productive than men, e.g. because they’ve taken time off work to have children;

3. Women are less willing to negotiate for higher pay or promotions or are less successful at negotiation; and

4. Employers discriminate against women - they’re more willing to hire or promote men than women or are willing to pay men more for work of the same value.

We find that discrimination is an important explanation for why women earn less and that this is particularly true in profitable industries that find it easy to hire workers. I will discuss ways that government policy can potentially help close this gap.