Economics at your fingertips  

Public-private wage gaps and skill levels: evidence from French, British and Italian micro data

Paolo Ghinetti () and Claudio Lucifora ()

International Journal of Manpower, 2013, vol. 34, issue 5, 429-446

Abstract: Purpose - The authors aim to investigate public-private pay determination using French, British and Italian micro data from the 2001 ECHP (European Community Household Panel) and estimate public/private wage differentials by country. By focussing on different countries, they exploit institutional differences to gain insights on the process of pay formation. Design/methodology/approach - The authors use regression techniques to compute the pay premium both at the average and at different education/skill levels. They then decompose the observed differences into a part due to characteristics and another part due to different returns between sectors, also at different quantiles of the wage distributions within skills. Findings - Even after controlling for observable characteristics, the authors find an overall positive wage differential for public sector workers in each of the three countries. As expected, the differential varies by skill. In general, the present findings do not fully support the view that the public (private) sector pays more (less) among the low skilled than the private (public) sector, and that the opposite is true for the highly skilled. The authors also document that the public pay premium varies as one moves up or down in the skill distribution. Practical implications - On the one hand, the authors’ results confirm that the public sector acts in general as a “fair employer”, compressing pay dispersion with respect to the private sector. On the other hand, the interactions of public and private labour market institutional arrangements play a crucial role in shaping the structure of relative wages across sectors. For example, when the monopsony power in wage bargaining is relevant in both sectors as, for example, in Britain, the private sector pays in absolute value proportionally less, and also the public wage premium is smaller. Originality/value - This is the first attempt to use comparable data for three countries to analyse public/private wage differences by skill levels and to link the evidence with differences in public/private wage setting regimes.

Keywords: Wage differentials; Public sector; Skill levels; Decomposition methods; Public sector organizations; Private sector organizations; France; Italy; United Kingdom (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link) ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK

Access Statistics for this article

International Journal of Manpower is currently edited by Adrian Ziderman

More articles in International Journal of Manpower from Emerald Group Publishing
Bibliographic data for series maintained by Virginia Chapman ().

Page updated 2023-01-06
Handle: RePEc:eme:ijmpps:v:34:y:2013:i:5:p:429-446