Understanding the public sector pay gap

Maria Campos and Domenico Depalo
Authors registered in the RePEc Author Service: Roberto Ramos and Javier J. Pérez

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: We uncover the short- and long-run structural determinants of the existing cross-country heterogeneity in public-private pay differentials for a broad set of OECD countries. We explore micro data (EU-SILC, 2004-2012) and macro data (1970-2014). Three results stand out. First, when looking at pay gaps based on individual data, more than half of the cross-sectional variation of the sample can be accounted for by the degree of exposure to international competition, and by the size of the public sector labour force and its composition (i.e. the intensity in the provision of pure public goods), while labour market institutions play a very limited role. Second, we find that pay gaps have narrowed significantly during the recent financial crisis; nevertheless, this decrease can be explained by the widespread process of fiscal consolidation rather than by structural factors. Third, we find that in the log-run openness to international trade and improvements in the institutional quality of governments are associated with decreases in the public-private wage gap. Our findings can be rationalised by a body of research stressing non-competitive wage settlements in the public sector.

JEL-codes: H50 J31 J45 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.bportugal.pt/sites/default/files/anexos/papers/wp201606.pdf

Related works:
Journal Article: Understanding the public sector pay gap (2017)
Working Paper: Understanding the Public Sector Pay Gap (2015)
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: https://EconPapers.repec.org/RePEc:ptu:wpaper:w201606

Access Statistics for this paper

More papers in Working Papers from Banco de Portugal, Economics and Research Department Contact information at EDIRC.
Bibliographic data for series maintained by DEE-NTD ().