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Changing public sector wage differentials in the UK

Author

Listed:
  • Richard Disney

    (Institute for Fiscal Studies and University of Sussex)

  • Amanda Gosling

    (Institute for Fiscal Studies and University of Kent)

Abstract

The paper estimates public sector wage differentials and their changes over time for men and women in the United Kingdom using panel data from the New Earnings Survey/Annual Survey of Hours and Earnings for the period 1975 to 2006. It presents estimates that are robust to unobserved workforce characteristics and that also show the impact of policy changes and cyclical factors, by allowing the average measured public sector 'premium' or 'penalty' to be time-varying. The methodology also allows us to examine the extent to which discrepancies in public and private sector pay induce changing relative qualities of the sectoral workforces. Results are given for men and women comparing mean wages in the public and private sectors as a whole. There is, on average, a very small positive premium over the whole period for public sector women and a very small penalty for men; however the variability of the differential is much more striking than the average difference. The method can also be applied to sub-groups in the labour market, and we illustrate the case of female public sector nurses and midwives, where the comparison group are private sector workers who have ever been, or will be, public sector nurses or midwives. Measured variations in this nurses' differential reflects the various changes in pay structure and government pay policies over the period; it is striking however that in the last decade, the 'raw' differential accruing to public sector nurses and midwives has declined almost continuously, whereas the composition and quality-adjusted differential shows no overall trend.

Suggested Citation

  • Richard Disney & Amanda Gosling, 2008. "Changing public sector wage differentials in the UK," IFS Working Papers W08/02, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:08/02
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    File URL: http://www.ifs.org.uk/wps/wp0802.pdf
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    References listed on IDEAS

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    Cited by:

    1. Marie Drolet & Karen Mumford, 2012. "The Gender Pay Gap for Private-Sector Employees in Canada and Britain," British Journal of Industrial Relations, London School of Economics, vol. 50(3), pages 529-553, September.
    2. Kim Mather & Roger Seifert, 2016. "Police pay—contested and contestable," Industrial Relations Journal, Wiley Blackwell, vol. 47(3), pages 204-219, May.
    3. Bargain, Olivier & Melly, Blaise, 2008. "Public Sector Pay Gap in France: New Evidence Using Panel Data," IZA Discussion Papers 3427, Institute of Labor Economics (IZA).
    4. Faggio, Giulia & Overman, Henry, 2014. "The effect of public sector employment on local labour markets," Journal of Urban Economics, Elsevier, vol. 79(C), pages 91-107.
    5. Maczulskij, Terhi, 2013. "Public–private sector wage differentials and the business cycle," Economic Systems, Elsevier, vol. 37(2), pages 284-301.
    6. Johan Willner, 2010. "Public Options and Altruistic Firms - Antitrust Targets or Tools? The Welfare Impact of a Mixed Oligopoly With Managerial firms," Discussion Papers 59, Aboa Centre for Economics.
    7. Bargain, Olivier & Etienne, Audrey & Melly, Blaise, 2018. "Public Sector Wage Gaps over the Long-Run: Evidence from Panel Administrative Data," IZA Discussion Papers 11924, Institute of Labor Economics (IZA).
    8. Johan Willner, 2013. "The welfare impact of a managerial oligopoly with an altruistic firm," Journal of Economics, Springer, vol. 109(2), pages 97-115, June.
    9. Ahmed Nawaz Hakro & Yaseen Ghulam & Shabbar Jaffry & Vyoma Shah, 2021. "Employment Choices and Wage Differentials: Evidence on Labor Force Data Sets from Pakistan," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(1), pages 199-216, March.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy

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