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Public-Private Sector Wage Differentials in Australia

Listed author(s):
  • Mahuteau, Stéphane

    ()

    (NILS, Flinders University)

  • Mavromaras, Kostas G.

    ()

    (NILS, Flinders University)

  • Richardson, Sue

    ()

  • Zhu, Rong

    ()

    (NILS, Flinders University)

This paper examines wage differentials between public sector and private sector workers in Australia. After controlling for observed characteristics and individual fixed effects, we show that on average workers in the public sector earn about 5.1% percent more hourly wages than those in the private sector. The wage premium is slightly higher for females than males. Using a panel data quantile regression model with fixed effects, we show that the positive wage effects of public sector employment are heterogeneous, with comparatively larger impact at the lower end of the wage distribution than at other parts. We also find evidence of heterogeneity in the public sector wage premiums by qualification, time period, occupation and state/territory.

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File URL: http://ftp.iza.org/dp10719.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10719.

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Length: 21 pages
Date of creation: Apr 2017
Publication status: forthcoming in: Economic Record, 2017
Handle: RePEc:iza:izadps:dp10719
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  3. Nordman, Christophe J. & Rakotomanana, Faly & Roubaud, François, 2016. "Informal versus Formal: A Panel Data Analysis of Earnings Gaps in Madagascar," World Development, Elsevier, vol. 86(C), pages 1-17.
  4. Carlo Dell'Aringa & Claudio Lucifora & Federica Origo, 2007. "Public Sector Pay And Regional Competitiveness. A First Look At Regional Public-Private Wage Differentials In Italy," Manchester School, University of Manchester, vol. 75(4), pages 445-478, 07.
  5. Olivier Bargain & Prudence Kwenda, 2014. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 63(1), pages 117-153.
  6. Elisa Birch, 2006. "The public-private sector earnings gap; in Australia: a quantile regression approach," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 9(2), pages 99-123, June.
  7. Blackaby, D. H. & Murphy, P. D. & O'Leary, N. C., 1999. "The payment of public sector workers in the UK: reconciliation with North American findings," Economics Letters, Elsevier, vol. 65(2), pages 239-243, November.
  8. Ivan A. Canay, 2011. "A simple approach to quantile regression for panel data," Econometrics Journal, Royal Economic Society, vol. 14(3), pages 368-386, October.
  9. Borland, Jeff & Hirschberg, Joe & Lye, Jenny, 1998. "Earnings of Public Sector and Private Sector Employees in Australia: Is There a Difference?," The Economic Record, The Economic Society of Australia, vol. 74(224), pages 36-53, March.
  10. Mueller, Richard E., 1998. "Public-private sector wage differentials in Canada: evidence from quantile regressions," Economics Letters, Elsevier, vol. 60(2), pages 229-235, August.
  11. J. Ignacio Garcia-Perez & Juan F. Jimeno, 2007. "Public Sector Wage Gaps In Spanish Regions," Manchester School, University of Manchester, vol. 75(4), pages 501-531, 07.
  12. Antecol, Heather & Eren, Ozkan & Ozbeklik, Serkan, 2013. "The effect of Teach for America on the distribution of student achievement in primary school: Evidence from a randomized experiment," Economics of Education Review, Elsevier, vol. 37(C), pages 113-125.
  13. 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, 03.
  14. Martin Binder & Alex Coad, 2015. "Heterogeneity in the Relationship Between Unemployment and Subjective Wellbeing: A Quantile Approach," Economica, London School of Economics and Political Science, vol. 82(328), pages 865-891, October.
  15. Nicole M. Fortin, 2008. "The Gender Wage Gap among Young Adults in the United States: The Importance of Money versus People," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
  16. Hospido, Laura & Moral-Benito, Enrique, 2016. "The public sector wage premium in Spain: Evidence from longitudinal administrative data," Labour Economics, Elsevier, vol. 42(C), pages 101-122.
  17. Robert F. Elliott & Kostas G. Mavromaras & Dominique Meurs, 2007. "Special Issue On Public Sector Pay Structures And Regional Competitiveness: Editors' Introduction," Manchester School, University of Manchester, vol. 75(4), pages 373-385, 07.
  18. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
  19. Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
  20. Stéphane Mahuteau & Rong Zhu, 2016. "Crime Victimisation and Subjective Well‐Being: Panel Evidence From Australia," Health Economics, John Wiley & Sons, Ltd., vol. 25(11), pages 1448-1463, November.
  21. Maria Manuel Campos & Mário Centeno, 2011. "Public-private wage gaps in the period prior to the adoption of the euro: an application based on longitudinal data," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
  22. Peter Siminski, 2013. "Are low-skill public sector workers really overpaid? A quasi-differenced panel data analysis," Applied Economics, Taylor & Francis Journals, vol. 45(14), pages 1915-1929, May.
  23. Vella, Francis, 1993. "Nonwage Benefits in a Simultaneous Model of Wages and Hours: Labor Supply Functions of Young Females," Journal of Labor Economics, University of Chicago Press, vol. 11(4), pages 704-723, October.
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