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Public Sector Pay Gap in France: New Evidence Using Panel Data

  • Bargain, Olivier


    (University of Aix-Marseille II)

  • Melly, Blaise


    (Brown University)

We estimate the public wage gap in France for the period 1990-2002, both at the mean and at different quantiles of the wage distribution, for men and women separately. We account for unobserved heterogeneity by using fixed effects estimations on panel data and, departing from usual practice, allow the public wage markup to vary over time. We also provide one of the very first applications of fixed effects quantile regressions. Contrary to common belief, results convey that monetary returns are not fundamentally different in the public sector. Firstly, public wage ‘premia’ (for women) or ‘penalties’ (for men) are essentially the result of selection. After controlling for unobserved heterogeneity, only small pay differences between sectors remain over time, reflecting fluctuations due to specific public policies and to the pro-cyclicality of private sector wages. The long-term difference is essentially zero. Secondly, the relative compression of the wage distribution by the public sector is also partly due to unobserved characteristics. The most natural explanation for these results is that the civil sector manages to attract better workers in the lower part of the distribution, in part because of non-monetary gains (including job protection), but fails to retain the most productive ones at the top.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3427.

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Length: 20 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3427
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  2. Fabien Postel-Vinay & Hélène Turon, 2007. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," Economic Journal, Royal Economic Society, vol. 117(523), pages 1460-1503, October.
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  8. 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.
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  16. 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.
  17. Richard Disney & Amanda Gosling, 2008. "Changing public sector wage differentials in the UK," IFS Working Papers W08/02, Institute for Fiscal Studies.
  18. Denis Fougère & Julien Pouget, 2003. "Les déterminants économiques de l'entrée dans la fonction publique," Économie et Statistique, Programme National Persée, vol. 369(1), pages 15-48.
  19. Koenker, Roger, 2004. "Quantile regression for longitudinal data," Journal of Multivariate Analysis, Elsevier, vol. 91(1), pages 74-89, October.
  20. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, Department of Economics, University of Bristol, UK.
  21. Disney, Richard F & Gosling, Amanda, 2003. "A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990's," CEPR Discussion Papers 3787, C.E.P.R. Discussion Papers.
  22. 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 F107-F118, February.
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