Women in New Zealand earn, on average, 18-25 percent less than comparable men. In this paper, we use a decade of annual wage and productivity data from New Zealand’s Linked Employer-Employee Database, which covers nearly the entire economy, to jointly estimate firm production functions and wage bill equations to evaluate whether differences in worker productivity explain why women get paid, on average, less than statistically similar men and, if not, whether the pay gap is indicative that women are discriminated against in the labour market. We next exploit heterogeneity in measured discrimination across industries and over time, along with detailed data on firm profitability, sector competitiveness and other firm characteristics, to evaluate different economic theories of the persistence of discrimination.

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