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Public-private sector pay differentials in a devolved Scotland

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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 Study (BHPS). Employing a switching regression model, and testing for double sample selection from the participation decision and sector choice, the wage gap is shown to be 10 % for males and 24 % for females. For males this is mainly due to differences in productive characteristics and selectivity, while for females the picture is more ambiguous. Findings also suggest that there exists a male private sector wage premium. 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.

Suggested Citation

  • Axel Heitmueller, 2006. "Public-private sector pay differentials in a devolved Scotland," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 295-323, November.
  • Handle: RePEc:cem:jaecon:v:9:y:2006:n:2:p:295-323
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    Cited by:

    1. Ferreira Lima, Luis Cristovao, 2013. "The Persistent Inequality in the Great Brazilian Cities: The Case of Brasília," MPRA Paper 50938, University Library of Munich, Germany.
    2. Louis Christofides & Maria Michael, 2013. "Exploring the public-private sector wage gap in European countries," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-53, December.
    3. Afonso, António & Gomes, Pedro, 2014. "Interactions between private and public sector wages," Journal of Macroeconomics, Elsevier, pages 97-112.
    4. Gabriela Grotkowska & Leszek Wincenciak, 2014. "Public sector wage premium in Poland: can it be explained by structural differences in employment?," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 38.
    5. Antón, José-Ignacio & Muñoz de Bustillo, Rafael, 2013. "Public-private sector wage differentials in Spain. An updated picture in the midst of the Great Recession," MPRA Paper 48897, University Library of Munich, Germany.
    6. Long, Wenjin & Appleton, Simon & Song, Lina, 2013. "Job Contact Networks and Wages of Rural-Urban Migrants in China," IZA Discussion Papers 7577, Institute for the Study of Labor (IZA).
    7. Terhi Maczulskij & Jaakko Pehkonen, 2011. "Public-Private Sector Pay Gaps in Finland: A Quantile Regression Analysis," Finnish Economic Papers, Finnish Economic Association, vol. 24(2), pages 111-127, Autumn.
    8. Cho, Yongwon, 2013. "The Effect of the National School Lunch Program on Childhood Obesity," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150758, Agricultural and Applied Economics Association.
    9. Anna Lovasz & Ewa Cukrowska, 2014. "Are children driving the gender wage gap? Comparative evidence from Poland and Hungary," Budapest Working Papers on the Labour Market 1404, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    10. Miracle Ntuli & Prudence Kwenda, 2013. "Labour Unions and Wage Inequality Among African Men in South Africa," Working Papers 13159, University of Cape Town, Development Policy Research Unit.
    11. Edwin van Gameren & Ingrid Ooms, 2009. "Childcare and labor force participation in the Netherlands: the importance of attitudes and opinions," Review of Economics of the Household, Springer, vol. 7(4), pages 395-421, December.
    12. Gabriela Grotkowska, 2016. "Regional variation in the public sector wage premium in Poland," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 46.
    13. Coppola, Andrea & Calvo-Gonzalez, Oscar, 2011. "Higher wages, lower pay : public vs. private sector compensation in Peru," Policy Research Working Paper Series 5858, The World Bank.
    14. Antonio di Paolo, 2011. "Knowledge of catalan, public/prívate sector choice and earnings: Evidence from a double sample selection model," Hacienda Pública Española, IEF, vol. 197(2), pages 9-35, June.
    15. repec:spr:stmapp:v:26:y:2017:i:2:d:10.1007_s10260-016-0368-5 is not listed on IDEAS
    16. Gabriela Grotkowska & Leszek Wincenciak & Tomasz Gajderowicz, 2017. "Evolution of the Public-Sector Wage Premium in Poland," Gospodarka Narodowa, Warsaw School of Economics, issue 1, pages 5-31.
    17. Ferreira Lima, Luis Cristovao, 2013. "A Persistente Desigualdade nas Grandes Cidades Brasileiras: o Caso de Brasília
      [The Persistent Inequality in the Great Brazilian Cities: The case of Brasília]
      ," MPRA Paper 50936, University Library of Munich, Germany.
    18. Peter Siminski, 2013. "Are low-skill public sector workers really overpaid? A quasi-differenced panel data analysis," Applied Economics, Taylor & Francis Journals, vol. 45(14), pages 1915-1929, May.
    19. repec:pra:mprapa:48888 is not listed on IDEAS
    20. repec:eee:ecosys:v:41:y:2017:i:2:p:248-265 is not listed on IDEAS
    21. Jelena Lausev, 2014. "WHAT HAS 20 YEARS OF PUBLIC–PRIVATE PAY GAP LITERATURE TOLD US? EASTERN EUROPEAN TRANSITIONING vs. DEVELOPED ECONOMIES," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 516-550, July.

    More about this item

    Keywords

    wage differentials; switching model; double sample selection; decomposition;

    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; Switching Regression Models; Threshold Regression Models

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