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The Public Pay Gap in Britain: Small Differences That (Don't?) Matter

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Author Info
Fabien Postel-Vinay
Hélène Turon

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Abstract

The existing literature on inequality between private and public sectors focuses on cross-section differences in earnings levels. Forward-looking agents, however, care about income and job mobility too, which we show are substantially different between the two sectors. Using data from the BHPS, we estimate a model of income and employment dynamics, allowing for unobserved heterogeneity in the propensity to be employed in either job sector. We detect a positive average public premium both in income flows and in the present discounted sum of future income flows. We also find that income inequality is lower but more persistent in the public sector. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2007.02091.x
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Publisher Info
Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 117 (2007)
Issue (Month): 523 (October)
Pages: 1460-1503
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Handle: RePEc:ecj:econjl:v:117:y:2007:i:523:p:1460-1503

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  23. Audra J. Bowlus & Jean-Marc Robin, 2004. "Twenty Years of Rising Inequality in U.S. Lifetime Labour Income Values," Review of Economic Studies, Blackwell Publishing, vol. 71, pages 709-742, 07. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bargain, Olivier & Melly, Blaise, 2008. "Public Sector Pay Gap in France: New Evidence Using Panel Data," IZA Discussion Papers 3427, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Monojit Chatterji & Karen Mumford & Peter N. Smith, 2007. "The Public-Private Sector Gender Wage Differential: Evidence from Matched Employee-Workplace Data," IZA Discussion Papers 3158, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Gian Luigi Albano & Clare Leaver, 2005. "Transparency, Recuitment and Retention in the Public Sector," The Centre for Market and Public Organisation 05/132, Department of Economics, University of Bristol, UK. [Downloadable!]
  4. Azmat, Ghazala & Manning, Alan & Van Reenen, John, 2007. "Privatization, Entry Regulation and the Decline of Labour's Share of GDP: A Cross-Country Analysis of the Network Industries," CEPR Discussion Papers 6348, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. Richard Disney & Amanda Gosling, 2008. "Changing public sector wage differentials in the UK," IFS Working Papers W08/02, Institute for Fiscal Studies. [Downloadable!]
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