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

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 11.09.2008, 12:15 - 13:30


Presentation by 

Olivier Bargain (University of Aix-Marseille II)


We estimate the public wage gap in France for the period 1990-2002, both at the mean and atdifferent quantiles of the wage distribution, for men and women separately. We account for unobservedheterogeneity by using fixed effects estimations on panel data and, departing from usual practice, allowthe public wage markup to vary over time. We also provide one of the very first applications of fixedeffects quantile regressions. Contrary to common belief, results convey that monetary returns are notfundamentally 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, onlysmall pay differences between sectors remain over time, reflecting fluctuations due to specific publicpolicies and to the pro-cyclicality of private sector wages. The long-term difference is essentiallyzero. Secondly, the relative compression of the wage distribution by the public sector is also partlydue to unobserved characteristics. The most natural explanation for these results is that the civilsector manages to attract better workers in the lower part of the distribution, in part because ofnon-monetary gains (including job protection), but fails to retain the most productive ones at the top.

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