IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp8315.html
   My bibliography  Save this paper

The Public Sector Wage Premium in Spain: Evidence from Longitudinal Administrative Data

Author

Listed:
  • Hospido, Laura

    (Bank of Spain)

  • Moral-Benito, Enrique

    (Bank of Spain)

Abstract

This paper studies the public sector wage gap in Spain, by gender, skill level and type of contract, using recent administrative data from tax records. We estimate wage distributions in the presence of covariates separately for men and women in the public and in the private sectors, and we take advantage of the longitudinal structure of the data to control for selection. We find a positive public wage premium for men and women even after accounting for characteristics and endogenous selection; the observed average gap in hourly wages of 35 log points is reduced to 20 when accounting for observed characteristics, and to 10 once endogenous selection is also taken into consideration. We also find substantial variation in the public premium along the wage distribution once observed characteristics are accounted for. This variation, however, is offset by opposite patterns of selection into the public sector: while we observe positive selection into the public sector at the bottom of the wage distribution, workers at the top of the distribution select negatively into the public sector.

Suggested Citation

  • Hospido, Laura & Moral-Benito, Enrique, 2014. "The Public Sector Wage Premium in Spain: Evidence from Longitudinal Administrative Data," IZA Discussion Papers 8315, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8315
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp8315.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gerry Boyle & Rory McElligott & Jim O'Leary, 2004. "Public-Private Wage Differentials in Ireland, 1994-2001," Economics Department Working Paper Series n1421004, Department of Economics, National University of Ireland - Maynooth.
    2. Victor Chernozhukov & Iván Fernández‐Val & Blaise Melly, 2013. "Inference on Counterfactual Distributions," Econometrica, Econometric Society, vol. 81(6), pages 2205-2268, November.
    3. Robert Dur & Robin Zoutenbier, 2015. "Intrinsic Motivations of Public Sector Employees: Evidence for Germany," German Economic Review, Verein für Socialpolitik, vol. 16(3), pages 343-366, August.
    4. Raúl Ramos & Esteban Sanromá & Hipólito Simón, 2014. "Public-Private Sector Wage Differentials by Type of Contract: Evidence from Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 107-141, March.
    5. Francisco de Castro & Matteo Salto & Hugo Steiner, 2013. "The gap between public and private wages: new evidence for the EU," European Economy - Economic Papers 2008 - 2015 508, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    6. Ana Lamo & Javier J. Pérez & Ludger Schuknecht, 2012. "Public or Private Sector Wage Leadership? An International Perspective," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(1), pages 228-244, March.
    7. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    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. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    10. Koenker, Roger, 2004. "Quantile regression for longitudinal data," Journal of Multivariate Analysis, Elsevier, vol. 91(1), pages 74-89, October.
    11. Abrevaya, Jason & Dahl, Christian M, 2008. "The Effects of Birth Inputs on Birthweight," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 379-397.
    12. 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, July.
    13. Moulton, Brent R, 1990. "A Reexamination of the Federal-Private Wage Differential in the United States," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 270-293, April.
    14. Pérez, Javier J. & Giordano, Raffaela & Depalo, Domenico & Coutinho Pereira, Manuel & Eugène, Bruno & Papapetrou, Evangelia & Reiss, Lukas & Roter, Mojca, 2011. "The public sector pay gap in a selection of Euro area countries," Working Paper Series 1406, European Central Bank.
    15. 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.
    16. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    17. Bonin, Holger & Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Labour Economics, Elsevier, vol. 14(6), pages 926-937, December.
    18. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, November.
    19. Peter Gottschalk & Erika McEntarfer & Robert Moffitt, 2008. "Trends in the Transitory Variance of Male Earnings in the U.S., 1991-2003: Preliminary Evidence from LEHD data," Boston College Working Papers in Economics 696, Boston College Department of Economics.
    20. Dolado, Juan J & de la Rica, Sara & Anghel, Brindusa, 2011. "The Effect of Public Sector Employment on Women's Labour Market Outcomes," CEPR Discussion Papers 8468, C.E.P.R. Discussion Papers.
    21. George J. Borjas, 2002. "The Wage Structure and the Sorting of Workers into the Public Sector," NBER Working Papers 9313, National Bureau of Economic Research, Inc.
    22. Peter Gottschalk & Minh Huynh, 2010. "Are Earnings Inequality and Mobility Overstated? The Impact of Nonclassical Measurement Error," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 302-315, May.
    23. Herman P. Miller & Leon R. Paley, 1958. "Income Reported in the 1950 Census and on Income Tax Returns," NBER Chapters, in: An Appraisal of the 1950 Census Income Data, pages 177-204, National Bureau of Economic Research, Inc.
    24. Christian Dustmann & Arthur Van Soest, 1997. "Wage structures in the private and public sectors in West Germany," Fiscal Studies, Institute for Fiscal Studies, vol. 18(3), pages 225-247, August.
    25. Panizza, Ugo & Qiang, Christine Zhen-Wei, 2005. "Public-private wage differential and gender gap in Latin America: Spoiled bureaucrats and exploited women?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(6), pages 810-833, December.
    26. Raúl Ramos & Esteban Sanromá & Hipólito Simón, 2014. "Public-Private Sector Wage Differentials by Type of Contract: Evidence from Spain," Hacienda Pública Española, IEF, vol. 208(1), pages 107-141, March.
    27. 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 and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    28. Lassibille, Gerard, 1998. "Wage Gaps Between the Public and Private Sectors in Spain," Economics of Education Review, Elsevier, vol. 17(1), pages 83-92, February.
    29. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, September.
    30. 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, The Centre for Market and Public Organisation, University of Bristol, UK.
    31. Michael Rosholm & Helena Skyt Nielsen, 2001. "The public-private sector wage gap in Zambia in the 1990s: A quantile regression approach," Empirical Economics, Springer, vol. 26(1), pages 169-182.
    32. Evangelia Papapetrou, 2006. "The Public-Private Sector Pay Differential in Greece," Public Finance Review, , vol. 34(4), pages 450-473, July.
    33. Bargain, Olivier B. & Melly, Blaise, 2008. "Public Sector Pay Gap in France: New Evidence Using Panel Data," IZA Discussion Papers 3427, Institute of Labor Economics (IZA).
    34. 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.
    35. Sharon P. Smith, 1976. "Pay Differentials between Federal Government and Private Sector Workers," ILR Review, Cornell University, ILR School, vol. 29(2), pages 179-197, January.
    36. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    37. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-344, October.
    38. Manuel Coutinho Pereira & Maria Manuel Campos, 2009. "Wages and Incentives in the Portuguese Public Sector," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    39. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(2), pages 285-300, Summer.
    40. Gérard Lassibille, 1998. "Wage gaps between the public and private sectors in Spain [L'écart des salaires entre le secteur public et le secteur privé en Espagne]," Post-Print halshs-01267417, HAL.
    41. Victor Chernozhukov & Iván Fernández‐Val & Jinyong Hahn & Whitney Newey, 2013. "Average and Quantile Effects in Nonseparable Panel Models," Econometrica, Econometric Society, vol. 81(2), pages 535-580, March.
    42. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630, Elsevier.
    43. Lixin Cai & Amy Y. C. Liu, 2011. "Public–Private Sector Wage Gap in Australia: Variation along the Distribution," British Journal of Industrial Relations, London School of Economics, vol. 49(2), pages 362-390, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jelena Lausev, 2014. "WHAT HAS 20 YEARS OF PUBLIC–PRIVATE PAY GAP LITERATURE TOLD US? EASTERN EUROPEAN TRANSITIONING vs. DEVELOPED ECONOMIES," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 516-550, July.
    2. Jakub Picka, 2014. "Problém "public-private pay gap" v České republice [The Public-Private Pay Gap in the Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2014(5), pages 662-682.
    3. Domenico Depalo & Raffaela Giordano & Evangelia Papapetrou, 2015. "Public–private wage differentials in euro-area countries: evidence from quantile decomposition analysis," Empirical Economics, Springer, vol. 49(3), pages 985-1015, November.
    4. Raffaela Giordano & Manuel Coutinho Pereira & Domenico Depalo & Bruno Eugène & Evangelia Papapetrou & Javier J. Pérez & Lukas Reiss & Mojca Roter, 2014. "The Public Sector Pay Gap in a Selection of Euro Area Countries in the Pre-crisis Period," Hacienda Pública Española / Review of Public Economics, IEF, vol. 214(3), pages 11-34, September.
    5. Tansel, Aysit & Keskin, Halil Ibrahim & Ozdemir, Zeynel Abidin, 2008. "Public versus Private Sector Wage Gap in Egypt: Evidence from Quantile Regression on Panel Data," MPRA Paper 89540, University Library of Munich, Germany.
    6. Tansel, Aysit & Keskin, Halil Ibrahim & Ozdemir, Zeynel Abidin, 2020. "Public-private sector wage gap by gender in Egypt: Evidence from quantile regression on panel data, 1998–2018," World Development, Elsevier, vol. 135(C).
    7. Tansel, Aysit & Keskin, Halil Ibrahim & Ozdemir, Zeynel Abidin, 2008. "Public versus Private Sector Wage Gap in Egypt: Evidence from Quantile Regression on Panel Data," MPRA Paper 89540, University Library of Munich, Germany.
    8. Antón, José-Ignacio & Muñoz de Bustillo, Rafael, 2013. "Public-private sector wage differentials in Spain. An updated picture in the midst of the Great Recession," MPRA Paper 48897, University Library of Munich, Germany.
    9. Vladimir Gimpelson & Anna Lukiyanova & Anna Sharunina, 2015. "Estimating the Public-Private Wage Gap in Russia: What Does Quantile Regression Tell Us?," HSE Working papers WP BRP 104/EC/2015, National Research University Higher School of Economics.
    10. Tansel, Aysit & Keskin, Halil Ibrahim & Ozdemir, Zeynel Abidin, 2008. "Public versus Private Sector Wage Gap in Egypt: Evidence from Quantile Regression on Panel Data," MPRA Paper 89540, University Library of Munich, Germany.
    11. Raúl Ramos & Esteban Sanromá & Hipólito Simón, 2014. "Public-Private Sector Wage Differentials by Type of Contract: Evidence from Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 107-141, March.
    12. repec:pra:mprapa:48888 is not listed on IDEAS
    13. Carolina Castagnetti & Luisa Rosti & Marina Töpfer, 2019. "The Public-Private Sector Wage Differential Across Gender in Italy: a New Quantile-Based Decomposition Approach," Economics Bulletin, AccessEcon, vol. 39(4), pages 2533-2539.
    14. Gimpelson, Vladimir & Lukiyanova, Anna & Sharunina, Anna, 2019. "Economics and Politics of the Public-Private Wage Gap (The Case of Russia)," IZA Discussion Papers 12247, Institute of Labor Economics (IZA).
    15. Nikolic, Jelena & Rubil, Ivica & Tomić, Iva, 2017. "Pre-crisis reforms, austerity measures and the public-private wage gap in two emerging economies," Economic Systems, Elsevier, vol. 41(2), pages 248-265.
    16. Lovász, Anna & Altwicker-Hámori, Szilvia, 2013. "A köz- és a magánszféra kereseti különbségei Magyarországon, 2002-2008. Javíthat-e hosszú távon a közalkalmazottak relatív helyzetén egy 50 százalékos béremelés? [An assessment of Hungary s public/," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 500-522.
    17. Michael, Maria & Christofides, Louis N., 2020. "The impact of austerity measures on the public - private sector wage gap in Europe," Labour Economics, Elsevier, vol. 63(C).
    18. Raúl Ramos & Esteban Sanromá & Hipólito Simón, 2014. "Public-Private Sector Wage Differentials by Type of Contract: Evidence from Spain," Hacienda Pública Española, IEF, vol. 208(1), pages 107-141, March.
    19. Szilvia Hamori & Anna Lovasz, 2011. "Can a fifty percent increase in public sector wages improve the position of public sector employees in the long run? An assessment of the public-private income gap in Hungary," Budapest Working Papers on the Labour Market 1106, Institute of Economics, Centre for Economic and Regional Studies.
    20. Rebekka Christopoulou & Vassilis Monastiriotis, 2014. "The Greek Public Sector Wage Premium before the Crisis: Size, Selection and Relative Valuation of Characteristics," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 579-602, September.
    21. Ricardo Hausmann & Ljubica Nedelkoska & Sehar Noor, 2020. "You Get What You Pay For: Sources and Consequences of the Public Sector Premium in Albania and Sri Lanka," Growth Lab Working Papers 153, Harvard's Growth Lab.

    More about this item

    Keywords

    wage distribution; quantile regression; public sector wage gap; panel data;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp8315. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.