This paper provides an approximation to the measurement of public sector wage gaps in Spanish regions. By using data from the European Community Household Panel, it is shown that the balance between what private firms pay in the local market and what the public sector pays, differs substantially in different areas of the country. Public sector wage differences among Spanish regions are mostly due to differences in returns, not to differences in characteristics or to selection effects, and are not constant across gender, educational levels, or occupations. Moreover, in those regions where Regional Governments have a higher weight in public employment, public wage gaps are higher and public employers pay higher returns. There also seems to be a cross-regional positive correlation between public wage gaps and unemployment, and a negative one between labour productivity and public wage gaps. Hence, a tentative conclusion is that the incentives to select into the public sector are higher in the low productivity regions, precisely those where scarcity of human capital in the private sector may be the most important factor for explaining economic backwardness.
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Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number
06.10.
Find related papers by JEL classification: J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
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