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The public-private pay gap: a robust quantile approach

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  • Domenico Depalo

    (Bank of Italy)

  • Raffaela Giordano

    (Bank of Italy)

Abstract

This paper investigates whether a public sector premium exists after controlling for observable characteristics and for additional motivations, other than monetary, that may induce workers to prefer employment in the public sector. We study the entire conditional wage distribution on Italian micro data, covering the period 1998-2008. The evidence under random sampling shows the existence of a wage differential averaging at about 14% for women and 4% for men, generally lower at the high tail of the wage distribution and in the Northern regions. The premium significantly increases when possible sorting is considered; the correction is particularly large above the median of the wage distribution, therefore suggesting that the additional motivations may play an important role above all at higher wage levels. When we restrict our comparison to large private firms, a differential is confirmed for women but not for men.

Suggested Citation

  • Domenico Depalo & Raffaela Giordano, 2011. "The public-private pay gap: a robust quantile approach," Temi di discussione (Economic working papers) 824, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_824_11
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    Cited by:

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    2. 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.
    3. 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.
    4. Tryphon Kollintzas & Dimitris Papageorgiou & Efthymios Tsionas & Vanghelis Vassilatos, 2018. "Market and political power interactions in Greece: an empirical investigation," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-43, December.
    5. Domenico Depalo & Santiago Pereda-Fernández, 2020. "Consistent estimates of the public/private wage gap," Empirical Economics, Springer, vol. 58(6), pages 2937-2947, June.
    6. Andrea Camilli & Pedro Gomes, 2023. "Public employment and homeownership dynamics," Public Choice, Springer, vol. 194(1), pages 101-155, January.
    7. repec:pra:mprapa:48888 is not listed on IDEAS
    8. 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.
    9. 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.
    10. Kollintzas, Tryphon & Vassilatos, Vanghelis & Papageorgiou, Dimitris, 2013. "A Neoclassical Growth Model for the Insiders ? Outsiders Society," CEPR Discussion Papers 9640, C.E.P.R. Discussion Papers.

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    More about this item

    Keywords

    public employment; wage differentials; wage determination;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • 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
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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