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Are We Better Off Working in the Public Sector?

In: Advances in Applied Economic Research

Author

Listed:
  • Yi Wang

    (Cardiff School of Management, Cardiff Metropolitan University)

  • Peng Zhou

    (Cardiff Business School, Cardiff University)

Abstract

This paper critically reviews the literature on public sector wage premium, especially in the developed countries like the USA and the UK. It is found that the pay advantage is persistent over the latest half century, but it started to decline since the late-1990s; in particular, females tend to enjoy a higher wage premium than males. A key technical problem of estimating wage premium is selection bias, because the sector choice is endogenously determined by individual characteristics and job attributes. The main prevailing methods in the current literature are categorised into four main types, and a sample dataset from the Labour Force Survey (UK) in the latest decade is used to apply and compare these methods. The findings suggest that Blinder–Oaxaca and OLS seem to underestimate the wage premium by 2 %, compared to propensity score matching method.

Suggested Citation

  • Yi Wang & Peng Zhou, 2017. "Are We Better Off Working in the Public Sector?," Springer Proceedings in Business and Economics, in: Nicholas Tsounis & Aspasia Vlachvei (ed.), Advances in Applied Economic Research, chapter 0, pages 379-409, Springer.
  • Handle: RePEc:spr:prbchp:978-3-319-48454-9_28
    DOI: 10.1007/978-3-319-48454-9_28
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    More about this item

    Keywords

    Public sector wage premium; Decomposition; Treatment effect; Propensity score matching;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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