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Public sector wage gaps in Spanish regions

Author Info

Listed author(s):
  • J. Ignacio García-Pérez

    ()

    (Department of Economics, Universidad Pablo de Olavide)

  • Juan F. Jimeno

    ()

    (Bank of Spain, Research Division)

Abstract

This paper provides an approximation to the measurement of public sector wage gaps in Spanish regions. By using data from the European Community Household Panel, it is shown that the balance between what private firms pay in the local market and what the public sector pays, differs substantially in different areas of the country. Public sector wage differences among Spanish regions are mostly due to differences in returns, not to differences in characteristics or to selection effects, and are not constant across gender, educational levels, or occupations. Moreover, in those regions where Regional Governments have a higher weight in public employment, public wage gaps are higher and public employers pay higher returns. There also seems to be a cross-regional positive correlation between public wage gaps and unemployment, and a negative one between labour productivity and public wage gaps. Hence, a tentative conclusion is that the incentives to select into the public sector are higher in the low productivity regions, precisely those where scarcity of human capital in the private sector may be the most important factor for explaining economic backwardness.

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File URL: http://www.upo.es/serv/bib/wps/econ0610.pdf
File Function: First version, 2006
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Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 06.10.

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Length: 48 pages
Date of creation: Mar 2006
Handle: RePEc:pab:wpaper:06.10
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More information through EDIRC

Keywords: public sector; wage differentials; switching regressions; Spanish regions.;

Other versions of this item:

Find related papers by JEL classification:
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
  • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
  • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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  1. Adriana Kugler & Juan F. Jimeno & Virginia Hernanz, "undated". "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labor Market Reforms," Working Papers 2003-14, FEDEA.
  2. 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.
  3. Liliana E. Pezzin & Barbara Steinberg Schone, 1999. "Intergenerational Household Formation, Female Labor Supply and Informal Caregiving: A Bargaining Approach," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 475-503.
  4. Jimeno, Juan F. & Bentolila, Samuel, 1998. "Regional unemployment persistence (Spain, 1976-1994)," Labour Economics, Elsevier, vol. 5(1), pages 25-51, March.
  5. Prescott, David & Wilton, David, 1992. "The Determinants of Wage Changes in Indexed.and Nonindexed Contracts: A Switching Model," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 331-355, July.
  6. Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages 270-295, June.
  7. 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.
  8. 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.
  9. 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.
  10. Carrasco, Raquel, 2001. "Binary Choice with Binary Endogenous Regressors in Panel Data: Estimating the Effect of Fertility on Female Labor Participation," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(4), pages 385-394, October.
  11. Yun, Myeong-Su, 1999. "Generalized Selection Bias and The Decomposition of Wage Differentials," IZA Discussion Papers 69, Institute for the Study of Labor (IZA).
  12. María A.Davia & Virginia Hernanz, 2004. "Temporary employment and segmentation in the Spanish labour market: An empirical analysis through the study of wage differentials," Spanish Economic Review, Springer;Spanish Economic Association, vol. 6(4), pages 291-318, December.
  13. Cecilia Albert & Juan F. Jimeno & Gloria Moreno, "undated". "Pay Determination in the Spanish Public Sector," Working Papers 97-18, FEDEA.
  14. Juan F. Jimeno & Luis Toharia, 1993. "The effects of fixed-term employment on wages: theory and evidence from Spain," Investigaciones Economicas, Fundación SEPI, vol. 17(3), pages 475-494, September.
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