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Private-public wage gap and return to experience: Role of geography, gender and education

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  • Rattsø, Jørn
  • Stokke, Hildegunn E.

Abstract

Analyses of the static private-public wage premium are available for most industrialized countries and the higher education level in the public sector has been shown to be important. We address three shortcomings in these studies – the return to work experience accumulated in the two sectors, the role of geography, and gender differences. Rich register data for Norway allow for observation of work experience by sector and region, and the dynamic gap resulting from different returns to sector experience can be calculated. When selection on observable and unobservable worker characteristics is controlled for, the estimates show that experience accumulated in the private sector has higher return than public sector experience. Geography matters, and both the static gap and the dynamic experience effect are higher in cities. For the low educated, the additional return to private experience is a city phenomenon only. Gender differences are important for high-educated workers. High-educated women have less additional return to private sector experience than high-educated men and receive the same gain from experience accumulated in cities and in the rest of the country. The dynamic experience effect adds to the static private wage premium, and for high-educated male workers it accounts for about 2/3 of the total wage gap including 10 years of experience.

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  • Rattsø, Jørn & Stokke, Hildegunn E., 2020. "Private-public wage gap and return to experience: Role of geography, gender and education," Regional Science and Urban Economics, Elsevier, vol. 84(C).
  • Handle: RePEc:eee:regeco:v:84:y:2020:i:c:s0166046220302568
    DOI: 10.1016/j.regsciurbeco.2020.103571
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    Cited by:

    1. Hildegunn E. Stokke, 2021. "The gender wage gap and the early‐career effect: the role of actual experience and education level," LABOUR, CEIS, vol. 35(2), pages 135-162, June.

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    More about this item

    Keywords

    Private-public wage gap; Worker experience; Worker fixed effects; City effect; Gender; Education;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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