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The Public-Private Sector Wage Differential for Full-Time Male Employees in Britain: A Preliminary Analysis

Author

Listed:
  • Monojit Chatterji
  • Karen Mumford

Abstract

Relative employment conditions have changed across the public and private sectors in Britain over the last decade with the former becoming a more attractive earnings option. Using new linked employee-employer data for Britain in 2004, this paper shows that, on average, full-time male public sector employees earn 11.7 log wage points more than their private sector counterparts. Decomposition analysis reveals that the majority of this pay premium is associated with public sector employees having individual characteristics associated with higher pay and to their working in higher paid occupations. Whilst there is some evidence of workplace segregation in the private sector, there is little indication that rates of return vary across the earnings distribution for either public or private sector employees. It no longer appears to be the case that the public sector provides a refuge for the low skilled at the expense of the highly educated. Furthermore, working conditions appear more uniform in the public sector and, unlike the private sector, there is no significant penalty associated with ethnic background.

Suggested Citation

  • Monojit Chatterji & Karen Mumford, 2007. "The Public-Private Sector Wage Differential for Full-Time Male Employees in Britain: A Preliminary Analysis," Dundee Discussion Papers in Economics 201, Economic Studies, University of Dundee.
  • Handle: RePEc:dun:dpaper:201
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    File URL: http://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_201.pdf
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    References listed on IDEAS

    as
    1. Stephen Nickell & Glenda Quintini, 2002. "The Consequences of The Decline in Public Sector Pay in Britain: A Little Bit of Evidence," Economic Journal, Royal Economic Society, vol. 112(477), pages 107-118, February.
    2. Karen Mumford & Peter N Smith, "undated". "The Gender Earnings Gap in Britain," Discussion Papers 04/05, Department of Economics, University of York.
    3. 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, vol. 52(1), pages 43-59, March.
    4. Yu, Keming & Van Kerm, Philippe & Zhang, Jin, 2004. "Bayesian quantile regression: An application to the wage distribution in 1990s Britain," IRISS Working Paper Series 2004-10, IRISS at CEPS/INSTEAD.
    5. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    Cited by:

    1. Gonzalo Fernández-de-Córdoba & Javier Pérez & José Torres, 2012. "Public and private sector wages interactions in a general equilibrium model," Public Choice, Springer, vol. 150(1), pages 309-326, January.

    More about this item

    Keywords

    public sector earnings; male; earnings-gap; interquantile; segregation;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J7 - Labor and Demographic Economics - - Labor Discrimination

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