Working Paper: NBER ID: w4734
Authors: James M. Poterba; Kim S. Rueben
Abstract: This paper documents the changing pattern of wage differentials between state and local government employees and their private sector counterparts during the 1979-1992 period. While the relative wages of women employed in the two sectors changed very little during this period, the relative wages of men employed in the state and local sector rose nearly 8%. There is substantial heterogeneity in the changes in relative wages of public and private sector employees during the 1980s. For highly educated workers, private sector wages rose significantly faster than public sector wages, while for those with at most a high school education, the public sector wage premium increased. We present both least squares and quantile regression estimates of the public sector premium. While the level of this premium is sensitive to our choice of quantile, the change in the premium, and the estimated pattern across skill levels, is not substantially affected by varying the quantile.
Keywords: public sector wages; wage differentials; quantile regression
JEL Codes: J31; H75
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| public sector employment (J45) | wage increases for men (J31) |
| highly educated workers (J24) | private sector wages rise faster than public sector wages (J45) |
| at most high school education (A21) | public sector wage premium increases (J45) |