Working Paper: CEPR ID: DP17038
Authors: Alba Couceiro de León; Juan J. Dolado
Abstract: This paper studies the wage differentials between the public and private sectors in Spain, as well as its distribution across different educational levels and by gender. To do so, the well-known Oaxaca-Blinder decomposition of mincerian wage regressions is applied for both sectors, breaking down the (public-private) wage gap into a component explained by differences in characteristics and another one capturing differences in returns to those characteristics. Data is drawn from the Wage Structure Survey by INE for 2010, 2014 and 2018. The main findings are: (i) strong wage compression by skills for all workers, and (ii) a female wage premium in the private sector. Both empirical results are rationalised by means of a monopoly-union wage model with monopsonistic features and female statistical discrimination.
Keywords: public sector; private sector; public-private wage gap; monopsony; unions
JEL Codes: J31; J38; J42; J45
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower-skilled workers in public sector earn higher wages (J45) | wage compression by skills (J31) |
| higher-skilled workers in public sector face negative wage gap (J45) | wage compression by skills (J31) |
| female wage premium in private sector (J31) | gender wage gap (J31) |
| public sector wage-setting mechanisms (J38) | equitable outcomes for women (I24) |
| public sector wage advantage (J45) | wage gap (J31) |
| observable productivity-related characteristics (J24) | wage gap (J31) |