Firms and ethnic wage differences

David Maré and Richard Fabling

No 25_07, Motu Working Papers from Motu Economic and Public Policy Research

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.

Keywords: Earnings; ethnicity; sorting; two-way fixed effects; linked employer employee data (search for similar items in EconPapers)
JEL-codes: J15 J30 J42 J71 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2025-08
New Economics Papers: this item is included in nep-hrm and nep-lma
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https://motu-www.motu.org.nz/wpapers/25_07.pdf

Related works:
Working Paper: Firms and Ethnic Wage Differences (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:mtu:wpaper:25_07

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