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The Public Pay Gap in Britain: Small Differences that (Don't?) Matter

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  • Helene Turon
  • Fabien Postel-Vinay

    ()
    (Department of Economics CREST-INSEE)

Abstract

The existing literature on inequality between private and public sectors focuses on cross-section differences in earnings levels. Forward-looking agents, however, care about income and job mobility too, which we show are substantially different between the two sectors. Using data from the BHPS, we estimate a model of income and employment dynamics, allowing for unobserved heterogeneity in the propensity to be employed in either job sector. We detect a positive average public premium both in income flows and in the present discounted sum of future income flows. We also find that income inequality is lower but more persistent in the public sector. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2005 Meeting Papers with number 92.

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Date of creation: 2005
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Handle: RePEc:red:sed005:92

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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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Web page: http://www.EconomicDynamics.org/society.htm
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Keywords: Income Dynamics; Job Mobility; Public-Private Inequality; Selection Effects;

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