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Public employment and earnings inequality: An analysis based on conditional and unconditional quantile regressions

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  • Fournier, Jean-Marc
  • Koske, Isabell

Abstract

Studies investigating the link between public employment and earnings inequality based on micro data typically make use of conditional quantile regressions. Such analysis reveals why earnings may be more or less dispersed among public-sector than private-sector workers, but does not allow drawing conclusions about its impact on overall earnings inequality. The unconditional quantile regression technique proposed by Firpo et al. (2009) overcomes this deficiency, and this technique is applied here to show that a fall in public employment may raise or reduce earnings inequality, depending on country specificities. The paper also highlights the complementary roles of conditional and unconditional quantile regressions in investigating the determinants of earnings inequality.

Suggested Citation

  • Fournier, Jean-Marc & Koske, Isabell, 2013. "Public employment and earnings inequality: An analysis based on conditional and unconditional quantile regressions," Economics Letters, Elsevier, vol. 121(2), pages 263-266.
  • Handle: RePEc:eee:ecolet:v:121:y:2013:i:2:p:263-266
    DOI: 10.1016/j.econlet.2013.08.015
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    References listed on IDEAS

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    1. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    2. Jean-Marc Fournier & Isabell Koske, 2012. "The determinants of earnings inequality: evidence from quantile regressions," OECD Journal: Economic Studies, OECD Publishing, vol. 2012(1), pages 7-36.
    3. Alesina, Alberto & Baqir, Reza & Easterly, William, 2000. "Redistributive Public Employment," Journal of Urban Economics, Elsevier, vol. 48(2), pages 219-241, September.
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    5. Omar Arias & Walter Sosa-Escudero & Kevin F. Hallock, 2001. "Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data," Empirical Economics, Springer, vol. 26(1), pages 7-40.
    6. Richard B. Freeman, 1980. "Unionism and the Dispersion of Wages," ILR Review, Cornell University, ILR School, vol. 34(1), pages 3-23, October.
    7. Robinson, Sherman, 1976. "A Note on the U Hypothesis Relating Income Inequality and Economic Development," American Economic Review, American Economic Association, vol. 66(3), pages 437-440, June.
    8. 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.
    9. César Calderón & Alberto Chong & Rodrigo O. Valdés, 2005. "Labor Market Regulations and Income Inequality: Evidence for a Panel of Countries," Central Banking, Analysis, and Economic Policies Book Series, in: Jorge Restrepo & Andrea Tokman R. & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Edi (ed.),Labor Markets and Institutions, edition 1, volume 8, chapter 7, pages 221-279, Central Bank of Chile.
    10. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281-281.
    11. Angel López-Nicolás & Jaume García & Pedro J. Hernández, 2001. "How wide is the gap? An investigation of gender wage differences using quantile regression," Empirical Economics, Springer, vol. 26(1), pages 149-167.
    12. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
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    Cited by:

    1. repec:zbw:rwirep:0455 is not listed on IDEAS
    2. Simone Balestra & Uschi Backes-Gellner, 2014. "Heterogeneous effects of pupil-to-teacher ratio policies - A look at class size reduction and teacher aide," Economics of Education Working Paper Series 0102, University of Zurich, Department of Business Administration (IBW), revised Apr 2017.
    3. Deborah A. Cobb-Clark & Sonja C. Kassenboehmer & Mathias G. Sinning, 2013. "Locus of Control and Savings," Ruhr Economic Papers 0455, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    4. Cobb-Clark, Deborah A. & Kassenboehmer, Sonja C. & Sinning, Mathias G., 2016. "Locus of control and savings," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 113-130.
    5. Simone Balestra & Uschi Backes-Gellner, 2017. "Heterogeneous effects of pupil-to-teacher ratio policies - A look at class size reduction and teacher aide," Economics of Education Working Paper Series 0130, University of Zurich, Department of Business Administration (IBW).
    6. Gimpelson, Vladimir & Lukiyanova, Anna & Sharunina, Anna, 2019. "Economics and Politics of the Public-Private Wage Gap (The Case of Russia)," IZA Discussion Papers 12247, Institute of Labor Economics (IZA).
    7. Hajime Seya & Kay W. Axhausen & Makoto Chikaraishi, 2020. "Spatial unconditional quantile regression: application to Japanese parking price data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(2), pages 351-402, October.

    More about this item

    Keywords

    Quantile regression; Income inequality; Public employment;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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