Exploring the public-private sector wage gap in European countries

Abstract

We estimate the public-private sector pay gap for 27 European countries, using the 2008 EU SILC. The coefficients of conditional (on personal and job characteristics) public sector controls give a first impression on wage differences, while decompositions into explained and unexplained components (also accounting for selectivity) allow for a more complete analysis, which helps to identify possible causes of the gap. Regional patterns exist. Separate subsample decompositions based on age, education, gender and occupation, provide interesting insight regarding the pay structure of each country. Quantile decomposition analyses show that the public-private pay gap is, generally, negatively related to income quantiles. JEL classification: J31, J45, J48

Wages in and out of the public sector: new insights for six selected European countries

“…However, this result is consistent with the literature on the public-private differentials that has shown higher public wage premia when they are calculated on hourly earnings instead of monthly earnings (see, for example, Giordano et al, 2011;Christofides and Michael, 2013).…”

Determinants of regional differences in rates of overeducation in Europe

“…At an aggregate level this suggests that, in addition to those controls reflecting the interaction of labour demand and supply, variables capturing the key characteristics of both labour demand (the distribution of jobs) and labour supply (the distribution of workers) may play an important explanatory role. On the labour demand side we include measures for the proportions employed in public administration, where wage rates may be influenced by non-market factors (Christofides and Michael, 2013), and in low-waged occupations, specifically in Sales & Hotels and in micro firms. To the extent to which overeducation is driven by individuals substituting higher pay for more flexible working conditions (McGuinness & Sloane, 2011) the public administration sector is included on the basis that flexible working opportunities tend to be more available there.…”

Public-private wage duality during the Greek crisis

“…In other cases the decline in the public sector premium was associated with increased compression in the distribution of public sector pay (e.g., as reported by Hospido and Moral-Benito, 2014, for Spain, where the public sector premium fell between 2008 and 2012 by some 25%). In Greece, pre-crisis public sector premia had been known to be large and persistent (Papapetrou, 2006;Giordano et al, 2011;Christofides and Michael, 2013;Christopoulou and Monastiriotis, 2014). It is thus important, given the size of the crisis in Greece and the pervasiveness of the reform measures that were followed, to examine how the public sector premium evolved during the crisis.…”