The determinants of Aboriginal employment income

According to the 1986 Census, the average Aboriginal male in full-time employment had an income which was 71 per cent of that of the average non-Aboriginal male. The gap between the incomes of the average Aboriginal and non-Aboriginal female was less by 11 percentage points. This study uses Ordinary Least Square (OLS) regression techniques to decompose this gap into that part which can be attributed to differences between Aborigines and non-Aborigines in certain measured characteristics, for example education and labour market experience, and that part which remains unexplained by these measured differences. Differences between groups in the monetary rewards received for a given set of labour market endowments may arise because of discrimination between groups or because of differences in their labour supply behaviour. The results of this study show that most of the difference in income between Aboriginal and non-Aboriginal men can be accounted for by differences in their labour market endowments but there remains some part which is attributed to different rewards for these endowments. Endowment differences were less important in accounting for differences in the income of Aboriginal and non-Aboriginal women. The paper concludes with some discussion of the implications for policy