Public Sector Pay Gap in France: New Evidence Using Panel Data

20 Pages Posted: 23 May 2008

See all articles by Olivier Bargain

Olivier Bargain

IZA Institute of Labor Economics; University College Dublin (UCD)

Blaise Melly

Brown University - Department of Economics

Abstract

We estimate the public wage gap in France for the period 1990-2002, both at the mean and at different quantiles of the wage distribution, for men and women separately. We account for unobserved heterogeneity by using fixed effects estimations on panel data and, departing from usual practice, allow the public wage markup to vary over time. We also provide one of the very first applications of fixed effects quantile regressions. Contrary to common belief, results convey that monetary returns are not fundamentally different in the public sector. Firstly, public wage 'premia' (for women) or 'penalties' (for men) are essentially the result of selection. After controlling for unobserved heterogeneity, only small pay differences between sectors remain over time, reflecting fluctuations due to specific public policies and to the pro-cyclicality of private sector wages. The long-term difference is essentially zero. Secondly, the relative compression of the wage distribution by the public sector is also partly due to unobserved characteristics. The most natural explanation for these results is that the civil sector manages to attract better workers in the lower part of the distribution, in part because of non-monetary gains (including job protection), but fails to retain the most productive ones at the top.

Keywords: wage gap, public sector, selection, fixed effects, quantile regression

JEL Classification: C13, C14, C21, J31, J45

Suggested Citation

Bargain, Olivier and Melly, Blaise, Public Sector Pay Gap in France: New Evidence Using Panel Data. IZA Working Paper No. 3427, Available at SSRN: https://ssrn.com/abstract=1136232 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Olivier Bargain (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland
+353 1 716 8357 (Phone)
+353 1 283 0068 (Fax)

HOME PAGE: http://www.ucd.ie/economics/staff/obargain/obargain.htm

Blaise Melly

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

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