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Public and Private Sector Wages of Male Workers in Germany


  • Dustmann, C.
  • van Soest, A.


In this paper, we analyze several statistical assumptions used in empirical models on public -private sector wage structures. Based on data for Germany, which contain a large range of background variables usually not available in other studies, we investigate the sensitivity of the results to various specification and identification assumptions. The standard switching regression model is extended to allow for endogeneity of education level, experience, and hours worked. These estensions lead to considerably different parameter estimates. We compute and compare conditional and unconditional wage differentials between the public and the private sector for the various specifications. These differentials are sensitive to exclusion restictions on regressors, but robust across specifications which do and do not allow for endogeneity of education, experience, and hours worked.

Suggested Citation

  • Dustmann, C. & van Soest, A., 1997. "Public and Private Sector Wages of Male Workers in Germany," Economics Working Papers eco97/13, European University Institute.
  • Handle: RePEc:eui:euiwps:eco97/13

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    References listed on IDEAS

    1. Terrell, Katherine, 1993. "Public-private wage differentials in Haiti Do public servants earn a rent?," Journal of Development Economics, Elsevier, vol. 42(2), pages 293-314, December.
    2. Hartog, Joop & Oosterbeek, Hessel, 1993. "Public and private sector wages in the Netherlands," European Economic Review, Elsevier, vol. 37(1), pages 97-114, January.
    3. van Ophem, Hans, 1993. "A Modified Switching Regression Model for Earnings Differentials between the Public and Private Sectors in the Netherlands," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 215-224, May.
    4. Pederson, P. J. & Schmidt-Sorensen, J. B. & Smith, N. & Westergard-Nielsen, N., 1990. "Wage differentials between the public and private sectors," Journal of Public Economics, Elsevier, vol. 41(1), pages 125-145, February.
    5. Gindling, T H, 1991. "Labor Market Segmentation and the Determination of Wages in the Public, Private-Formal, and Informal Sectors in San Jose, Costa Rica," Economic Development and Cultural Change, University of Chicago Press, vol. 39(3), pages 584-605, April.
    6. Heckman, James J, 1990. "Varieties of Selection Bias," American Economic Review, American Economic Association, vol. 80(2), pages 313-318, May.
    7. Dustmann, C, 1993. "Earnings Adjustment of Temporary Migrants," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(2), pages 153-168, May.
    8. Morley Gunderson, 1979. "Earnings Differentials between the Public and Private Sectors," Canadian Journal of Economics, Canadian Economics Association, vol. 12(2), pages 228-242, May.
    9. Zweimuller, J & Winter-Ebmer, R, 1994. "Gender Wage Differentials in Private and Public Sector Jobs," Journal of Population Economics, Springer;European Society for Population Economics, vol. 7(3), pages 271-285, July.
    10. Theeuwes, J. & Koopmans, C. C. & Van Opstal, R. & Van Reijn, H., 1985. "Estimation of optimal human capital accumulation parameters for The Netherlands," European Economic Review, Elsevier, vol. 29(2), pages 233-257.
    11. van der Gaag, Jacques & Vijverberg, Wim, 1988. "A Switching Regression Model for Wage Determinants in the Public and Private Sectors of a Developing Country," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 244-252, May.
    12. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
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    JEL classification:

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


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