Template-Type: ReDIF-Paper 1.0
Author-Name: Maré David 
Author-X-Name-First: David
Author-X-Name-Last: Maré
Author-Email: dave.mare@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Richard Fabling
Author-X-Name-First: Richard 
Author-X-Name-Last: Fabling
Author-Email: richard.fabling@xtra.co.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Title: Firms and ethnic wage differences 
Abstract: We examine the contribution to ethnic earnings gaps of differences in the firms where different ethnic groups work. We use linked employer-employee data to estimate worker and firm pay premiums (fixed effects), adapting existing methods to deal with multiple-response ethnicities and weighting. The sorting of workers across firms contributes 10-26 percent of within-ethnicity gender gaps but affects average earnings for men or women within ethnic groups by less than 1 percent, in the face of average ethnic earnings gaps of up to 14 percent. We conclude that within-firm earnings differences are the dominant source of ethnic earnings gaps.
Length: 47 pages
Creation-Date: 2025-08
File-URL: https://motu-www.motu.org.nz/wpapers/25_07.pdf
Number: 25_07
Classification-JEL: J30, J15, J71, J42 
Keywords: Earnings; ethnicity; sorting; two-way fixed effects; linked employer employee data
Handle: RePEc:mtu:wpaper:25_07