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Public-Private Sector Pay Gaps in Finland: A Quantile Regression Analysis

  • Terhi Maczulskij


    (School of Business and Economics, University of Jyväskylä)

  • Jaakko Pehkonen


    (School of Business and Economics, University of Jyväskylä)

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    This paper examines public-private sector wage differentials in Finland using a quantile regression method. We control for the endogeneity of the working sector and allow the returns of individual skills to vary between industries. The results suggest that men earn a premium of 3 percent in the public sector at the lower-end jobs. At the median and the upper end of the distribution, men’s pay gap is negative, varying between 5 and 10 percent. Women, in turn, always earn more in the public sector (4–10 percent), and the premium is highest at the upper end of the earnings distribution.

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    Article provided by Finnish Economic Association in its journal Finnish Economic Papers.

    Volume (Year): 24 (2011)
    Issue (Month): 2 (Autumn)
    Pages: 111-127

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    Handle: RePEc:fep:journl:v:24:y:2011:i:2:p:111-127
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    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.
    2. Claudio Lucifora & Dominique Meurs, 2004. "The Public Sector Pay Gap in France, Great Britain and Italy," CHILD Working Papers wp04_04, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
    3. 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.
    4. Adamchik, Vera A. & Bedi, Arjun S., 2000. "Wage differentials between the public and the private sectors: evidence from an economy in transition," Labour Economics, Elsevier, vol. 7(2), pages 203-224, March.
    5. Christofides, Louis N. & Pashardes, Panos, 2002. "Self/paid-employment, public/private sector selection, and wage differentials," Labour Economics, Elsevier, vol. 9(6), pages 737-762, December.
    6. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09.
    7. Axel Heitmueller, 2006. "Public-private sector pay differentials in a devolved Scotland," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 295-323, November.
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