Decomposing the temporary-permanent wage gap in New Zealand Event as iCalendar

(COMPASS Research Centre)

06 October 2016

4 - 5pm

Venue: Room 107, Fale Pasifika Complex (273-107)

Contact info: Martin von Randow

Contact email:

Website: COMPASS

Associate Professor Gail Pacheco, Auckland University of Technology

Recent years have seen a push for greater labour market flexibility, and an accompanying upsurge of interest in temporary employment and the negative outcomes often associated with such employment arrangements. This study focuses on the pay outcome and investigates the presence of unexplained wage penalties for the temporary workforce in NZ. This country is a useful case study for such an analysis, because of the low levels of employment protection legislation afforded temporary workers, relative to the rest of the OECD.

The temporary-permanent wage gap is assessed via two alternative methods: Oaxaca decomposition and Nearest Neighbour matching (NNM). Analysis is conducted for the aggregate group of temporary workers, as well as the sub-groups of fixed term, casual, temp agency and seasonal workers. Results across the alternative methods are fairly comparable and robust, with no wage penalty evident for fixed term workers, and a sizable unexplained wage difference for casual workers. There is also support for the glass ceiling hypothesis with movement up the wage distribution associated with a widening of the predicted wage gap.

Gail Pacheco is an Associate Professor in the Economics, and Director of the NZ Work Research Institute at AUT. She has considerable experience leading funded projects involving both academic and industry collaborations (with for instance the Department of Labour, the Blind Foundation, Productivity Commission, United Nations Women, and Coca-Cola Amatil NZ). She is an applied empirical and labour economist and she also currently holds the post of Editor-in-Chief for New Zealand Economic Papers.


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