The Public-Private Pay Gap: A Robust Quantile Approach

47 Pages Posted: 17 Nov 2011

Date Written: September 23, 2011

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.

Keywords: public employment, wage differentials, wage determination

JEL Classification: H50, J31, J45, J50

Suggested Citation

Depalo, Domenico and Giordano, Raffaela, The Public-Private Pay Gap: A Robust Quantile Approach (September 23, 2011). Bank of Italy Temi di Discussione (Working Paper) No. 824. Available at SSRN: https://ssrn.com/abstract=1960983 or http://dx.doi.org/10.2139/ssrn.1960983

Domenico Depalo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Raffaela Giordano (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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