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Public-Private Sector Wage Differentials in Scotland: An Endogenous Switching Model

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Author Info
Heitmueller, Axel () (CERT Edinburgh and IZA Bonn)

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Abstract

The public-private sector wage gap in Scotland in 2000 is analysed using the extension sample of the British Household Panel Survey (BHPS). Employing an endogenous switching model, and testing for double sample selection from the participation decision and sector choice, the unadjusted wage gap is shown to be 10 per cent for males and 24 per cent for females. For males this is mainly due to differences in productive characteristics and selectivity. For females the picture is more ambiguous. Findings also suggest that there exists a substantial wage premium for male private sector employees. While there is no evidence of a sample selection bias for females, the sector choice of males is systematically correlated with unobservables. Furthermore, the structural switching regression indicates that expected wage differentials between sectors are an important driving force for sectoral assignment.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 992.

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Length: 35 pages
Date of creation: Jan 2004
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Handle: RePEc:iza:izadps:dp992

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Related research
Keywords: wage differentials; endogenous switching; double sample selection; decomposition;

Find related papers by JEL classification:
J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models

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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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    Other versions:
  11. 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)
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    Other versions:
  15. Richard Disney & Amanda Gosling, 1998. "Does it pay to work in the public sector?," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 347-374, November. [Downloadable!]
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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. Budria, Santiago, 2006. "Schooling and the distribution of wages in the european private and public sectors," MPRA Paper 90, University Library of Munich, Germany. [Downloadable!]
  2. Anna Iara, 2006. "Skill diffusion by temporary migration? Returns to Western European working experience in the EU-accession countries," IEHAS Discussion Papers 0607, Institute of Economics, Hungarian Academy of Sciences, revised 30 Aug 2006. [Downloadable!]
    Other versions:
  3. Monojit Chatterji & Terhi Maczulskij & Jaakko Pehkonen, 2008. "Public Sector Pay in Finland," Discussion Papers 213, University of Dundee, Economic Studies. [Downloadable!]
  4. Kristjan-Olari Leping, 2005. "Public-Private Sector Wage Differential In Estonia: Evidence From Quantile Regression," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 39, Faculty of Economics and Business Administration, University of Tartu (Estonia). [Downloadable!]
  5. Nguyen Danh, Hoang Long, 2006. "Public-Private Sector Wage Differentials for Males and Females in Vietnam," MPRA Paper 6583, University Library of Munich, Germany. [Downloadable!]
  6. Anna Iara, 2008. "Skill Diffusion by Temporary Migration? Returns to Western European Work Experience in Central and East European Countries," Working Papers 46, The Vienna Institute for International Economic Studies, wiiw. [Downloadable!]
  7. Sarah Brown & Jenny Roberts & Karl Taylor, 2008. "Reservation Wages, Labour Market Participation And Health," Working Papers 2008002, The University of Sheffield, Department of Economics, revised Feb 2008. [Downloadable!]
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