A Comparison of the Wage Structure between the Public and Private Sectors in Japan

19 Pages Posted: 10 Dec 2014 Last revised: 18 Jul 2017

See all articles by Masayuki Morikawa

Masayuki Morikawa

Research Institute of Economy, Trade and Industry (RIETI)

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Date Written: November 17, 2014

Abstract

This paper compares the wage structure between the public and private sectors in Japan by using a large microdata set covering public and private sector employees. Rather than comparing overall wage levels, we examine the differences in relative wages by gender, age, education, and region. According to the estimation of wage functions, wage gaps by gender and educational attainment are smaller in the public sector than in private companies. The public sector’s age-wage profile is steeper than that of the private sector. Public sector wages are more compressed; the wages are relatively higher at the lower end of the wage distribution and relatively lower at the higher end. The regional wage differential is smaller in the public sector. As a result, the wage level of public sector workers is relatively higher in rural regions and relatively lower in large metropolitan regions. To ensure the efficient provision of public services, it is inappropriate to compare only average wages. We should carefully observe the differences in wage structure by individual characteristics and by region.

Keywords: Public sector; Wage gap; Age-wage profile; Regional wage differential

JEL Classification: J31; J45; R23

Suggested Citation

Morikawa, Masayuki, A Comparison of the Wage Structure between the Public and Private Sectors in Japan (November 17, 2014). AJRC Working Paper No. 07/2014, Available at SSRN: https://ssrn.com/abstract=2534188 or http://dx.doi.org/10.2139/ssrn.2534188

Masayuki Morikawa (Contact Author)

Research Institute of Economy, Trade and Industry (RIETI) ( email )

1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo 100-8901
Japan

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