Changes in the Structure of Wages in the Public and Private Sectors

Lawrence Katz and Alan Krueger

No 3667, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The wage structure in the U.S. public sector responded sluggishly to substantial changes in private sector wages during the 1970s and 1980s. Despite a large expansion in the college/high school wage differential during the 1980s in the private sector, the public sector college wage premium remained fairly stable. Although wage differentials by skill, in the public sector were fairly unresponsive to changes in the private sector, overall pay levels for state and local government workers were quite sensitive to local labor market conditions. But federal government regional pay levels appear unaffected by local economic conditions. Several possible explanations are considered to account for the rigidity of the government internal wage structure, including employer size, unionization, and nonprofit status. None of these factors adequately explains the pay rigidity we observe in the government.

Date: 1991-03
Note: LS
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Published as Ronald Ehrenberg, editor. Research in Labor Economics 12. Greenwich, CT: JAI Press, 1991, pp. 131-172

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Related works:
Working Paper: CHANCES IN THE STRUCTURE OF WAGES IN THE PUBLIC AND PRIVATE SECTORS (1991)
Working Paper: Changes in the Structure of Wages in the Public and Private Sectors (1991)
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