While economic theory assumes wages reflect productivity, real-world data reveals persistent pay gaps based on gender and immigration status. To isolate these disparities, this study analyzes 2025 Labour Force Survey data and controls for 15 worker characteristics like education, tenure, age, and location to isolates the residual gaps and a clearer look at wage discrimination between the public and private sectors.
Pay gaps based on gender and immigration persist in Canada. The public sector remains a fairer place for both women and new Canadians to work pay gaps persist here but they're much smaller than in the private sector. In no part of the analysis are women actually paid more than equivalent men or immigrants paid more than equivalent Canadian born workers, but the pay is closer in the public sector.
The gender pay gap among public sector workers is smallest in the health care and social assistance industry. It is widest in the education industry. But none of these are as bad as the gender pay for private sector workers across all industries.
In 2025, women in the public sector were paid 4.9 per cent more than equivalent private sector female workers. Men with equivalent characteristics in both the public and private sectors were paid much more than private sector women, at 10.2 per cent and nine per cent, respectively. The five-point higher pay between equivalent women in the public vs. private sectors ensures that public sector workers, broadly, are paid more than private sector workerss because women face less pay discrimination in the public sector.
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