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The Rising Public Sector Pay Premium in the New Zealand Labour Market

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Abstract

This note reports propensity score matching estimates of the public sector pay premium in New Zealand for each year from 2003 until 2007. Comparing with observably similar private sector workers shows that public sector workers have received a pay premium that has grown in each year, from almost zero in 2003 to 22 percent in 2007. Unless there have been unmeasured changes in the attributes of public sector jobs that give rise to compensating pay differentials, this rising public sector pay premium is most plausibly attributed to an increase in non-competitive rents.

Suggested Citation

  • John Gibson, 2008. "The Rising Public Sector Pay Premium in the New Zealand Labour Market," Working Papers in Economics 08/16, University of Waikato.
    • Handle: RePEc:wai:econwp:08/16
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    File URL: https://repec.its.waikato.ac.nz/wai/econwp/0816.pdf
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    1. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    2. John Gibson & Chris Hector & Trinh Le, 2008. "The Distributional Impact of KiwiSaver Incentives," Working Papers in Economics 08/02, University of Waikato.
    3. John Gibson, 2007. "The Public Sector Pay Premium and Compensating Differentials in the New Zealand Labour Market," Working Papers in Economics 07/20, University of Waikato.
    4. 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.
    5. John Gibson & Steven Stillman, 2009. "Why Do Big Firms Pay Higher Wages? Evidence from an International Database," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 213-218, February.
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    Cited by:

    1. Patrick Minford & Yi Wang & Peng Zhou, 2020. "Resolving the public-sector wage premium puzzle by indirect inference," Applied Economics, Taylor & Francis Journals, vol. 52(7), pages 726-741, February.

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    More about this item

    Keywords

    compensating differentials; propensity score matching; public sector; wages;
    All these keywords.

    JEL classification:

    • 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

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