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Are We Better Off Working in the Public Sector?

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Advances in Applied Economic Research

Part of the book series: Springer Proceedings in Business and Economics ((SPBE))

Abstract

This paper critically reviews the literature on public sector wage premium, especially in the developed countries like the USA and the UK. It is found that the pay advantage is persistent over the latest half century, but it started to decline since the late-1990s; in particular, females tend to enjoy a higher wage premium than males. A key technical problem of estimating wage premium is selection bias, because the sector choice is endogenously determined by individual characteristics and job attributes. The main prevailing methods in the current literature are categorised into four main types, and a sample dataset from the Labour Force Survey (UK) in the latest decade is used to apply and compare these methods. The findings suggest that Blinder–Oaxaca and OLS seem to underestimate the wage premium by 2 %, compared to propensity score matching method.

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Notes

  1. 1.

    In fact, there is no good instrument in the dataset available. Many other variables are tried, but none of them are valid.

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Author information

Authors and Affiliations

  1. Cardiff School of Management, Cardiff Metropolitan University, Cardiff, CF5 2YB, UK

    Yi Wang

  2. Cardiff Business School, Cardiff University, Cardiff, CF10 3EU, UK

    Peng Zhou

Authors
  1. Yi Wang
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  2. Peng Zhou
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Correspondence to Yi Wang .

Editor information

Editors and Affiliations

  1. Department of International Trade, Western Macedonia University of Applied Sciences, Kastoria, Greece

    Nicholas Tsounis

  2. Department of International Trade, Western Macedonia University of Applied Sciences, Kastoria, Greece

    Aspasia Vlachvei

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Wang, Y., Zhou, P. (2017). Are We Better Off Working in the Public Sector?. In: Tsounis, N., Vlachvei, A. (eds) Advances in Applied Economic Research. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-48454-9_28

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