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Public Sector Pay Gaps and Skill Levels: a Cross-Country Comparison

Paolo Ghinetti () and Claudio Lucifora ()

No 118, Working Papers from SEMEQ Department - Faculty of Economics - University of Eastern Piedmont

Abstract: In this study, we investigate public-private pay determination using French, British and Italian micro data from the 2001 ECHP. We document that the distribution of wages is very different between public and private workers. As a result, the public pay premium varies as one moves up or down in the wage distribution. In France, Great Britain and Italy the public sector wage premium is higher for low skilled public sector workers, whilst the opposite happens for high skilled workers. These effects are more pronounced in the service sector. Additional results suggest that if a worker with certain characteristics was exogenously moved from the public to the private sector, he suffered a welfare (wage) loss, which is higher for the low skilled, who are the most protected in the public sector. In the light of the privatisation process of formerly public service, this process may in general impose some cost to involved public employees. Moreover, such costs are decreasing with the level of wages. Finally, the magnitude of these costs depend on the country considered, and, hence on the associated institutional setting.

Keywords: Wage differentials; Public sector; Quantile regression (search for similar items in EconPapers)
JEL-codes: C14 J31 J45 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2008-04
New Economics Papers: this item is included in nep-eec and nep-lab
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