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Flying High and Laying Low in the Public and Private Sectors: A Comparison of Pay Differentials for Full-Time Male Employees in Britain

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  • Chatterji, Monojit
  • Mumford, Karen

Abstract

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. Further focussing analysis on the highly skilled and unskilled occupations in both sectors, reveals evidence of workplace segregation positively impacting on earnings in the private sector for the highly skilled, and in the public sector for the unskilled. Substantial earnings gaps between the highly skilled and unskilled are found, and the unexplained components in these gaps are very similar regardless of sector.

Suggested Citation

  • Chatterji, Monojit & Mumford, Karen, 2008. "Flying High and Laying Low in the Public and Private Sectors: A Comparison of Pay Differentials for Full-Time Male Employees in Britain," SIRE Discussion Papers 2008-11, Scottish Institute for Research in Economics (SIRE).
    • Handle: RePEc:edn:sirdps:24
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    File URL: http://hdl.handle.net/10943/24
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    References listed on IDEAS

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    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. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    3. 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.
    4. Mumford, Karen A. & Smith, Peter N., 2007. "Assessing the Importance of Male and Female Part-Time Work for the Gender Earnings Gap in Britain," IZA Discussion Papers 2981, Institute of Labor Economics (IZA).
    5. repec:bla:econom:v:71:y:2004:i:281:p:275-297 is not listed on IDEAS
    6. Karen Mumford & Peter N Smith, "undated". "Job Tenure in Britain: Employee Characteristics Versus Workplace Effects," Discussion Papers 04/06, Department of Economics, University of York.
    7. James M. Poterba & Kim S. Rueben, 1994. "The Distribution of Public Sector Wage Premia: New Evidence Using Quantile Regression Methods," NBER Working Papers 4734, National Bureau of Economic Research, Inc.
    8. VAN KERM Philippe & YU Keming & 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.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

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

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