Generalized switching regression analysis of private and public sector wage structures in Germany
AbstractThis paper analyzes wage structures in the public and the private sector for Germany. The data contains a rich set of variables on parents' characteristics that we use as instruments. We extend the empirical literature in this field by endogenizing education level and hours worked, and by using life cycle wage differentials in the structural selection equation. We show that these extentions significantly improve the standard model. Moreover, they lead to considerably different parameter estimates. We compute conditional and unconditional wage predictions for the various specifications using model simulations. We find that, on average, potential wages in the private sector exceed those in the public sector. Those actually working in the public sector, would do somewhat better in the private sector, while those working in the private sector would earn much less in the public sector.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1995-44.
Date of creation: 1995
Date of revision:
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Web page: http://center.uvt.nl
Regression Analysis; Public Choice; Wage Differentials; labour economics;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
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