The Gender Wage Gap in Australia: Accounting for Linked Employer-Employee Data from the 1995 Australian Workplace Industrial Relations Survey

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Discussion Paper

Abstract

To assess the extent of any remaining gender wage gap in Australia, this paper uses unit record data from the extensive 1995 Australian Workplace Industrial Relations Survey (AWIRS95) commissioned by the Department of Employment, Workplace Relations and Small Business. Among other things, AWIRS95 identifies earnings data that provide the opportunity to clearly assess any gender wage gap. Specifically, econometric analysis and human capital theory are partnered in determining characteristics of the Australian labour force when split by gender. A random effects model is used to overcome the possible bias of linked employer-employee data. The associated gender wage gap is decomposed into components deemed to be explainable or unexplainable in relation to the model specifications. Results indicate that the gender gap, as well as its unexplainable component, continues to be an integral aspect of the Australian wage determination process. The unexplainable difference is expressed in monetary terms to show the low pre-tax financial impact of potential gender bias in the Australian labour market.

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