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Explaining the Public-Sector Pay Gap: The Role of Skill and College Major

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  • Max Schanzenbach

Abstract

This paper reassesses the public-sector pay gap using AFQT score and college major as measures of skill. Among the college educated, there is strong evidence that those with lower skills enter the public sector. In contrast to the private sector, for college-educated public-sector workers, AFQT score is not correlated with pay, and college major is only weakly predictive of pay. Furthermore, simple controls for college major explain most of the public-private-sector pay gap. I conclude that the public-sector pay gap is much smaller than previously estimated and pay rigidities cause significant skill-based selection between the sectors.

Suggested Citation

  • Max Schanzenbach, 2015. "Explaining the Public-Sector Pay Gap: The Role of Skill and College Major," Journal of Human Capital, University of Chicago Press, vol. 9(1), pages 1-44.
    • Handle: RePEc:ucp:jhucap:doi:10.1086/680596
    DOI: 10.1086/680596
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    Cited by:

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    3. Rattsø, Jørn & Stokke, Hildegunn E., 2019. "Identification of the private-public wage gap," Labour Economics, Elsevier, vol. 59(C), pages 153-163.

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