Differences in Skill Levels of Educated Workers Between the Public and private Sectors, the Return to Skills and the Connection between them: Evidence from the PIAAC Surveys

This study relates to a series of countries, and examines how the private sector differs from the public sector in the distribution of cognitive skills that characterize educated workers, and what variables are correlated with these differences. We find that in almost all countries, the return on skills is higher in the private sector, but there is a high level of variance between countries. The gap in returns in Israel is similar to the average of the other countries among men, and relatively high among women. The wider the gap is, the higher the skills of workers in the private sector are relative to the skills of those employed in the public sector. It was also found that the higher the country’s per capita GDP is, the higher the skills of educated men in the public sector are relative to the skills of educated men in the private sector.​