IDEAS home Printed from https://ideas.repec.org/a/sgh/gosnar/y2017i1p5-31.html
   My bibliography  Save this article

Evolution of the Public-Sector Wage Premium in Poland

Author

Listed:
  • Gabriela Grotkowska
  • Leszek Wincenciak
  • Tomasz Gajderowicz

Abstract

The aim of this paper is to estimate the adjusted sectoral wage gap in Poland from 1999 to 2012. We use a set of individual data from a survey on the structure of earnings by occupation (SEO) carried out by Poland’s Central Statistical Office (CSO) every two years for businesses with more than nine employees. We apply quantile regression and the Ñopo decomposition method to address several methodological problems of wage differential analysis. We show that, after controlling for structural differences in employment, there is no clear trend in the evolution of the adjusted public-sector wage premium in Poland in recent years. The parametric approach indicates a positive and growing premium, with significant variations across different parts of the wage distribution. The non-parametric approach yields different results, indicating a negative premium with no clear trend in the 1999-2012 period, with a declining public-sector wage penalty in recent years. This means that the Polish labour market is becoming increasingly similar to its counterparts in developed countries in this respect.

Suggested Citation

  • Gabriela Grotkowska & Leszek Wincenciak & Tomasz Gajderowicz, 2017. "Evolution of the Public-Sector Wage Premium in Poland," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 5-31.
  • Handle: RePEc:sgh:gosnar:y:2017:i:1:p:5-31
    as

    Download full text from publisher

    File URL: http://www.journalssystem.com/gna/pdf-100723-33174
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Raaj Tiagi, 2010. "Public Sector Wage Premium in Canada: Evidence from Labour Force Survey," LABOUR, CEIS, vol. 24(4), pages 456-473, December.
    2. 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.
    3. Lehmann, Hartmut & Wadsworth, Jonathan, 2000. "Tenures That Shook the World: Worker Turnover in Russia, Poland, and Britain," Journal of Comparative Economics, Elsevier, vol. 28(4), pages 639-664, December.
    4. 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, March.
    5. Haskel, Jonathan & Sanchis, Amparo, 1995. "Privatisation and X-Inefficiency: A Bargaining Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 43(3), pages 301-321, September.
    6. repec:lic:licosd:9500 is not listed on IDEAS
    7. Lokshin, Michael M. & Jovanovic, Branko, 2003. "Wage differentials and state-private sector employment choice in the Federal Republic of Yugoslavia," Policy Research Working Paper Series 2959, The World Bank.
    8. Jacobsen, Joyce P., 1992. "Spillover effects from government employment," Economics Letters, Elsevier, vol. 39(1), pages 101-104, May.
    9. Robert Elliott & Claudio Lucifora & Dominique Meurs, 1999. "Public Sector Pay Determination in the European Union: Issues and Outcomes," Palgrave Macmillan Books, in: Robert Elliott & Claudio Lucifora & Dominique Meurs (ed.), Public Sector Pay Determination in the European Union, chapter 1, pages 1-28, Palgrave Macmillan.
    10. Borjas, George J, 1984. "Electoral Cycles and the Earnings of Federal Bureaucrats," Economic Inquiry, Western Economic Association International, vol. 22(4), pages 447-459, October.
    11. 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.
    12. Tirole, Jean, 1994. "The Internal Organization of Government," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 1-29, January.
    13. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    14. repec:fth:prinin:282 is not listed on IDEAS
    15. Andrew Newell & Mieczyslaw Socha, 1998. "Wages distribution in Poland: The roles of privatization and international trade, 1992‐96," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 47-65, May.
    16. Yann Algan & Pierre Cahuc & André Zylberberg, 2002. "Public employment and labour market performance [‘On the benefits from rigid labour markets: Norms, market failures and social insurances’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 17(34), pages 7-66.
    17. Domenico Depalo & Raffaella Giordano, 2011. "The public-private pay gap: a robust quantile approach," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 70(1), pages 25-64, January.
    18. Dustmann, Christian & van Soest, Arthur, 1998. "Public and private sector wages of male workers in Germany," European Economic Review, Elsevier, vol. 42(8), pages 1417-1441, September.
    19. Keane, Michael P. & Prasad, Eswar S., 2006. "Changes in the structure of earnings during the Polish transition," Journal of Development Economics, Elsevier, vol. 80(2), pages 389-427, August.
    20. Branko Jovanovic & Michael M. Lokshin, 2004. "Wage Differentials between the State and Private Sectors in Moscow," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 107-123, March.
    21. repec:bla:rdevec:v:4:y:2000:i:3:p:229-43 is not listed on IDEAS
    22. Axel Heitmueller, 2006. "Public-private sector pay differentials in a devolved Scotland," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 295-323, November.
    23. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    24. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    25. Krstic, Gorana & Litchfield, Julie & Reilly, Barry, 2007. "An anatomy of male labour market earnings inequality in Serbia, 1996-2003," Economic Systems, Elsevier, vol. 31(1), pages 97-114, March.
    26. Johannes Hörner & L. Rachel Ngai & Claudia Olivetti, 2007. "Public Enterprises And Labor Market Performance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 363-384, May.
    27. repec:bla:econom:v:60:y:1993:i:238:p:161-81 is not listed on IDEAS
    28. Dale Belman & John S. Heywood, 2004. "Public-Sector Wage Comparability: The Role of Earnings Dispersion," Public Finance Review, , vol. 32(6), pages 567-587, November.
    29. Lawrence F. Katz & Alan B. Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," Working Papers 662, Princeton University, Department of Economics, Industrial Relations Section..
    30. R. F. Elliott & K. Duffus, 1996. "What Has Been Happening to Pay in the Public-Service Sector of the British Economy? Developments over the Period 1970–1992," British Journal of Industrial Relations, London School of Economics, vol. 34(1), pages 51-85, March.
    31. Jan Rutkowski, 1996. "High skills pay off: the changing wage structure during economic transition in Poland," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(1), pages 89-112, May.
    32. Vincenzo Quadrini & Antonella Trigari, 2007. "Public Employment and the Business Cycle," Scandinavian Journal of Economics, Wiley Blackwell, vol. 109(4), pages 723-742, December.
    33. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    34. Brainerd, Elizabeth, 2002. "Five Years after: The Impact of Mass Privatization on Wages in Russia, 1993-1998," Journal of Comparative Economics, Elsevier, vol. 30(1), pages 160-190, March.
    35. Lawrence Katz & Alan Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," Working Papers 662, Princeton University, Department of Economics, Industrial Relations Section..
    36. Falaris, Evangelos M., 2004. "Private and public sector wages in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 56-72, March.
    37. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    38. Gorodnichenko, Yuriy & Sabirianova Peter, Klara, 2007. "Public sector pay and corruption: Measuring bribery from micro data," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 963-991, June.
    39. Robert Elliott & Claudio Lucifora & Dominique Meurs (ed.), 1999. "Public Sector Pay Determination in the European Union," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-14946-9, December.
    40. Lucian Arye Bebchuk & Jesse M. Fried, 2004. "Stealth Compensation Via Retirement Benefits," NBER Working Papers 10742, National Bureau of Economic Research, Inc.
    41. 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.
    42. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 73(1), pages 245-261, January.
    43. Jacob Weisberg & Mieczslaw Waclaw Socha, 2002. "Earnings in Poland: The Private Versus the Public Sector," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 7(3), pages 17-38, Fall.
    44. Gabriela Grotkowska & Leszek Wincenciak & Tomasz Gajderowicz, 2016. "Public-private wage differential in a post-transition economy: A copula approach to the switching regression model," Working Papers 2016-19, Faculty of Economic Sciences, University of Warsaw.
    45. Holmlund, Bertil, 1993. "Wage setting in private and public sectors in a model with endogenous government behavior," European Journal of Political Economy, Elsevier, vol. 9(2), pages 149-162, May.
    46. Walter Fogel & David Lewin, 1974. "Wage Determination in the Public Sector," ILR Review, Cornell University, ILR School, vol. 27(3), pages 410-431, April.
    47. 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.
    48. Gabriela Grotkowska & Leszek Wincenciak, 2014. "Public sector wage premium in Poland: can it be explained by structural differences in employment?," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 38.
    49. Leslie, Derek, 1985. "The Economics of Cash Limits as a Method of Pay Determination," Economic Journal, Royal Economic Society, vol. 95(379), pages 662-678, September.
    50. Kent Friberg, 2007. "Intersectoral wage linkages: the case of Sweden," Empirical Economics, Springer, vol. 32(1), pages 161-184, April.
    51. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
    52. Kristjan-Olari Leping, 2006. "Evolution of the Public-Private Sector Wage Differential during Transition in Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 18(4), pages 419-436.
    53. 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.
    54. Dani Rodrik, 2000. "What Drives Public Employment in Developing Countries?," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 229-243, October.
    55. Newell, Andrew T. & Socha, Mieczyslaw, 2007. "The Polish Wage Inequality Explosion," IZA Discussion Papers 2644, Institute of Labor Economics (IZA).
    56. 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.
    57. Adamchik, Vera A. & Bedi, Arjun S., 2000. "Wage differentials between the public and the private sectors: evidence from an economy in transition," Labour Economics, Elsevier, vol. 7(2), pages 203-224, March.
    58. Ehrenberg, Ronald G, 1973. "The Demand for State and Local Government Employees," American Economic Review, American Economic Association, vol. 63(3), pages 366-379, June.
    59. Axel Heitmueller, 2006. "Public-Private Sector Pay Differentials in a Devolved Scotland," Journal of Applied Economics, Taylor & Francis Journals, vol. 9(2), pages 295-323, November.
    60. Michael M. Lokshin & Branko Jovanovic, 2003. "Wage differentials and state‐private sector employment choice in Yugoslavia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(3), pages 463-491, September.
    61. repec:bla:etrans:v:15:y:2007:i::p:733-758 is not listed on IDEAS
    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. Gabriela Grotkowska & Leszek Wincenciak & Tomasz Gajderowicz, 2018. "Public–private wage differential in a post‐transition economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(3), pages 495-522, July.
    3. Gabriela Grotkowska & Leszek Wincenciak, 2014. "Public sector wage premium in Poland: can it be explained by structural differences in employment?," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 38.
    4. 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.
    5. 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.
    6. Gabriela Grotkowska, 2016. "Regional variation in the public sector wage premium in Poland," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 46.
    7. Maczulskij, Terhi, 2013. "Public–private sector wage differentials and the business cycle," Economic Systems, Elsevier, vol. 37(2), pages 284-301.
    8. 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).
    9. Lixin Cai & Amy Y.C. Liu, 2008. "Public-Private Wage Gap in Australia: Variation Along the Distribution," CEPR Discussion Papers 581, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    10. Jelena Laušev, 2012. "Public Sector Pay Gap In Serbia During Large-Scale Privatisation,By Educational Qualification," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(192), pages 7-24, January –.
    11. Evangelia Papapetrou, 2006. "The Public-Private Sector Pay Differential in Greece," Public Finance Review, , vol. 34(4), pages 450-473, July.
    12. repec:eee:labchp:v:3:y:1999:i:pc:p:3573-3630 is not listed on IDEAS
    13. 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.
    14. Alejandra Mizala & Pilar Romaguera & Sebastian Gallegos, 2010. "Public-Private Wage Gap In Latin America (1999-2007): A Matching Approach," Documentos de Trabajo 268, Centro de Economía Aplicada, Universidad de Chile.
    15. Gorodnichenko, Yuriy & Sabirianova Peter, Klara, 2007. "Public sector pay and corruption: Measuring bribery from micro data," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 963-991, June.
    16. Mizala, Alejandra & Romaguera, Pilar & Gallegos, Sebastián, 2011. "Public–private wage gap in Latin America (1992–2007): A matching approach," Labour Economics, Elsevier, vol. 18(S1), pages 115-131.
    17. Emilia Bedyk & Jacek Liwiński, 2016. "The wage premium from parents’ investments in the education of their children in Poland," Working Papers 2016-14, Faculty of Economic Sciences, University of Warsaw.
    18. 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).
    19. Zhuravleva, Tatiana (Журавлева, Татьяна), 2015. "Analysis of the Factors of Wages Differentiation in the Public and Private Sectors of the Russian Economy [Анализ Факторов Дифференциации Заработной Платы В Государственном И Частном Секторах Эконо," Published Papers mn10, Russian Presidential Academy of National Economy and Public Administration.
    20. Kosovka Ognjenović, 2011. "Wage Differences between the Private and the Public Sector in Serbia: Some Evidence from Survey Data," wiiw Balkan Observatory Working Papers 91, The Vienna Institute for International Economic Studies, wiiw.
    21. Tansel, Avsit, 2005. "Public-Private Employment Choice, Wage Differentials, and Gender in Turkey," Economic Development and Cultural Change, University of Chicago Press, vol. 53(2), pages 453-477, January.

    More about this item

    Keywords

    wage differentials; public sector wages; quantile regression; Ñopo decomposition; Poland;
    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

    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:sgh:gosnar:y:2017:i:1:p:5-31. 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: Grzegorz Konat (email available below). General contact details of provider: https://edirc.repec.org/data/sgwawpl.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.