A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990's

Disney, Richard F.; Gosling, Amanda

A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990's

CEPR Discussion Paper No. 3787

37 Pages Posted: 10 Apr 2003

See all articles by Richard F. Disney

Richard F. Disney

University of Nottingham; Institute for Fiscal Studies (IFS); Axia Economics

Amanda Gosling

University of Essex - Department of Economics; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Date Written: February 2003

Abstract

This Paper looks at public sector pay in Britain. We present a novel instrument that exploits the variation in public sector status across individuals arising from the privatisation programme of the 1990s. We show formally that results that are estimated may thereby be robust to self-selection and measurement error, both of which are important and which bias cross-sectional estimates. Our results suggest that women in the public sector earn more then they could elsewhere, whilst, on average, men do not.

Keywords: Measurement error, pay determination, selection effects

JEL Classification: J31

Suggested Citation: Suggested Citation

Disney, Richard F. and Gosling, Amanda, A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990's (February 2003). CEPR Discussion Paper No. 3787. Available at SSRN: https://ssrn.com/abstract=394603