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Public Sector Pay Gap in France: New Evidence Using Panel Data

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Author Info
Bargain, Olivier () (University College Dublin)
Melly, Blaise () (Brown University)

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Abstract

We estimate the public wage gap in France for the period 1990-2002, both at the mean and at different quantiles of the wage distribution, for men and women separately. We account for unobserved heterogeneity by using fixed effects estimations on panel data and, departing from usual practice, allow the public wage markup to vary over time. We also provide one of the very first applications of fixed effects quantile regressions. Contrary to common belief, results convey that monetary returns are not fundamentally different in the public sector. Firstly, public wage ‘premia’ (for women) or ‘penalties’ (for men) are essentially the result of selection. After controlling for unobserved heterogeneity, only small pay differences between sectors remain over time, reflecting fluctuations due to specific public policies and to the pro-cyclicality of private sector wages. The long-term difference is essentially zero. Secondly, the relative compression of the wage distribution by the public sector is also partly due to unobserved characteristics. The most natural explanation for these results is that the civil sector manages to attract better workers in the lower part of the distribution, in part because of non-monetary gains (including job protection), but fails to retain the most productive ones at the top.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3427.

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Length: 20 pages
Date of creation: Apr 2008
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Handle: RePEc:iza:izadps:dp3427

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Related research
Keywords: wage gap; public sector; selection; fixed effects; quantile regression;

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Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
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

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References listed on IDEAS
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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  2. Fabien Postel-Vinay & Hélène Turon, 2005. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," The Centre for Market and Public Organisation 05/121, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  3. Claudio Lucifora & Dominique Meurs, 2006. "The Public Sector Pay Gap In France, Great Britain And Italy," Review of Income and Wealth, Blackwell Publishing, vol. 52(1), pages 43-59, 03. [Downloadable!] (restricted)
    Other versions:
  4. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 73(1), pages 245-261, 01. [Downloadable!] (restricted)
  5. Disney, Richard F & Gosling, Amanda, 2003. "A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990's," CEPR Discussion Papers 3787, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Moulton, Brent R, 1990. "A Reexamination of the Federal-Private Wage Differential in the United States," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 270-93, April. [Downloadable!] (restricted)
  7. Bonin, Holger & Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Labour Economics, Elsevier, vol. 14(6), pages 926-937, December. [Downloadable!] (restricted)
    Other versions:
  8. Alberto Abadie & Joshua Angrist & Guido Imbens, 2002. "Instrumental Variables Estimates of the Effect of Subsidized Training on the Quantiles of Trainee Earnings," Econometrica, Econometric Society, vol. 70(1), pages 91-117, January. [Downloadable!] (restricted)
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  9. Hartog, Joop & Oosterbeek, Hessel, 1993. "Public and private sector wages in the Netherlands," European Economic Review, Elsevier, vol. 37(1), pages 97-114, January. [Downloadable!] (restricted)
  10. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 285-300, Summer.
  11. Dustmann, Christian & van Soest, Arthur, 1998. "Public and private sector wages of male workers in Germany," European Economic Review, Elsevier, vol. 42(8), pages 1417-1441, September. [Downloadable!] (restricted)
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  12. James M. Poterba & Kim S. Rueben, 1994. "The Distribution of Public Sector Wage Premia: New Evidence Using Quantile Regression Methods," NBER Working Papers 4734, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Stephen Nickell & Glenda Quintini, 2002. "The Consequences of The Decline in Public Sector Pay in Britain: A Little Bit of Evidence," Economic Journal, Royal Economic Society, vol. 112(477), pages F107-F118, February. [Downloadable!] (restricted)
  14. Richard Disney & Amanda Gosling, 2008. "Changing public sector wage differentials in the UK," IFS Working Papers W08/02, Institute for Fiscal Studies. [Downloadable!]
  15. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09. [Downloadable!] (restricted)
  16. Koenker, Roger, 2004. "Quantile regression for longitudinal data," Journal of Multivariate Analysis, Elsevier, vol. 91(1), pages 74-89, October. [Downloadable!] (restricted)
  17. Mueller, Richard E., 1998. "Public-private sector wage differentials in Canada: evidence from quantile regressions," Economics Letters, Elsevier, vol. 60(2), pages 229-235, August. [Downloadable!] (restricted)
  18. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, Department of Economics, University of Bristol, UK. [Downloadable!]
  19. Joshua Angrist & Victor Chernozhukov & Iván Fernández-Val, 2006. "Quantile Regression under Misspecification, with an Application to the U.S. Wage Structure," Econometrica, Econometric Society, vol. 74(2), pages 539-563, 03. [Downloadable!] (restricted)
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Full references

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. Josse Delfgaauw & Robert Dur, 2008. "Managerial Talent, Motivation, and Self-Selection into Public Management," Tinbergen Institute Discussion Papers 08-097/1, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. Lixin Cai & Amy Y.C. Liu, 2008. "Public-Private Wage Gap in Australia: Variation Along the Distribution," CEPR Discussion Papers 581, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
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