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Evolution of the Public-Private Sector Wage Differential during Transition in Estonia

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  • Kristjan-Olari Leping

Abstract

This article estimates the public-private sector wage differential in Estonia over the transition period. Quantile regression is used with a dataset from Estonian Labour Force Surveys from 1989 to 2004 for this purpose. The results of the analysis indicate that the public-private sector wage differential was negative during early transition but has decreased subsequently. It also shows that employees with low potential wages tend to gain more or lose less from working in the public sector than workers with high potential wages. The public-private sector wage differential is negatively related to the number of public employees and tends to be counter-cyclical. Political cycles have no effect on the public-private sector wage differential in Estonia.

Suggested Citation

  • Kristjan-Olari Leping, 2006. "Evolution of the Public-Private Sector Wage Differential during Transition in Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 18(4), pages 419-436.
  • Handle: RePEc:taf:pocoec:v:18:y:2006:i:4:p:419-436 DOI: 10.1080/14631370601008548
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    References listed on IDEAS

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    1. Daniel Münich & Jan Svejnar & Katherine Terrell, 2005. "Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy," The Review of Economics and Statistics, MIT Press, pages 100-123.
    2. 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.
    3. Magnani, Riccardo & Mercenier, Jean, 2009. "On linking microsimulation and computable general equilibrium models using exact aggregation of heterogeneous discrete-choice making agents," Economic Modelling, Elsevier, pages 560-570.
    4. Morton Stelcner & Jacques van der Gaag & Wim Vijverberg, 1989. "A Switching Regression Model of Public-Private Sector Wage Differentials in Peru: 1985-86," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 545-559.
    5. Kristjan-Olari Leping, 2005. "Public-Private Sector Wage Differential In Estonia: Evidence From Quantile Regression," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 39, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    6. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, pages 51-76.
    7. Claudio Lucifora & Dominique Meurs, 2006. "The Public Sector Pay Gap In France, Great Britain And Italy," Review of Income and Wealth, International Association for Research in Income and Wealth, pages 43-59.
    8. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, pages 433-444.
    9. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, pages 505-520.
    10. 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.
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    Cited by:

    1. 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.
    2. repec:sgh:gosnar:y:2017:i:1:p:5-31 is not listed on IDEAS
    3. repec:iza:izawol:journl:y:2017:n:388 is not listed on IDEAS
    4. 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.
    5. Vladimir Gimpelson & Anna Lukiyanova & Anna Sharunina, 2015. "Estimating the Public-Private Wage Gap in Russia: What Does Quantile Regression Tell Us?," HSE Working papers WP BRP 104/EC/2015, National Research University Higher School of Economics.
    6. Démurger, Sylvie & Li, Shi & Yang, Juan, 2012. "Earnings differentials between the public and private sectors in China: Exploring changes for urban local residents in the 2000s," China Economic Review, Elsevier, vol. 23(1), pages 138-153.

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