A comparison of the wage structure between the public and private sectors in Japan

This study compares the wages in the public and private sectors in Japan. In addition to comparing overall wage levels, we examine the differences in the wage structures, specifically, the relative wages by gender, age, education, and region. The size of the public sector wage premium depends crucially on the size of the private companies chosen as the comparison group. Wage gaps by gender and educational attainment are smaller in the public sector than they are in private companies. The public sector's age–wage profile is steeper than that of the private sector. Public sector wages are more compressed. In other words, the wages are relatively higher at the lower end of the wage distribution and relatively lower at the higher end. The regional wage differentials are smaller in the public sector. Here, the wage levels of public sector workers are relatively higher in rural regions and relatively lower in large metropolitan regions. To ensure the efficient provision of public services, it is inappropriate to compare only mean wages.     

Public–private sector segmentation in the Pakistani labour market

This study investigates public–private sector wage differentials for male and female waged employees in Pakistan. This is done using latest nationally representative data from the Pakistan Living Standards Measurement Survey (PSLM) 2005. We adopt three methodologies to obtain robust estimates of the wage differential and the results reveal that public sector workers enjoy large wage premia. The gross pro-public wage differential is much larger for women than for men. Our findings also show that while private and public sector workers’ differing characteristics ‘explain’ a larger proportion of the private–public wage gap for men, this is not the case for women.     

Education and Earnings in Transition: The Case of Lao*

This paper is a study on the returns to education in Lao, a country that has been largely neglected by the published literature. The authors found that the private rates of returns to education have risen significantly with economic transition. In particular, returns for young workers are considerably higher than for older workers. Although large earnings premiums are generally received by workers with high levels of education, the most profitable investment in education for a large number of paid employees is still the primary level. Moreover, there are the significant public–private sector wage differentials. The research findings have important implications for public sector salaries and the financing of education in Lao.     

Glass Ceilings versus Sticky Floors: Evidence from Southeast Asia and an International Update

Using counterfactual decompositions combined with quantile regression, we investigate the pattern of gender wage differentials in Asian and Latin American countries and combine the findings with existing evidence for European and other mostly developed countries. While in the group of Latin American countries glass ceilings are prevalent, no clear evidence of glass ceilings is found in the group of Asian countries where, generally, sticky floors or a mixed pattern is the norm. The findings are robust with as well as without occupation controls. In addition, analysis by sector points to glass ceilings in the public sector in most countries, while in the private sector the patterns vary. Combining the new evidence from the present study with existing evidence (in total we consider 60 countries), a comprehensive global picture of gender wage differentials is provided. Possible explanations for differences in patterns of gender wage differentials are discussed.     

Wage comparison by gender and the effect of job segregation: The case of Taiwan

This paper examines the wage differential between the genders in a newly industrialized economy-Taiwan. The objective is to verify the existence and magnitude of the Taiwanese wage differential (or discrimination as some would term it) and contrast it with findings in the United States.The gender gap was estimated for the private sector and the public sector respectively. It was found that wage discrimination against females does exist. The magnitude of the “discrimination” falls within the same range as the empirical estimates for the U.S. In Taiwan, however, the wage discrimination appeared to be slightly more severe in the public sector.A measure for the discriminatory effects of the “occupational segregation” was proposed and implemented. Contrary to common belief, the “occupational segregation” was not an important factor in wage discrimination. Nor did the disparity of jobs distribution in terms of “industry” generate any significant level of wage discrimination. The main source of gender discrimination (in terms of wage rates) came from the lower returns to the “productivity” characteristics (experience, education, tenure, etc.) and not from seemingly popular hypotheses of occupational segregation (or, in more general terms, job segregation). This is in sharp contrast to previous studies.     

Returns to private and public education in Bangladesh and Pakistan: A comparative analysis

This paper documents wage differentials between private and public school graduates in Bangladesh and Pakistan. While evidence in support of a wage advantage of private school graduates in Bangladesh is lacking, Pakistani private school graduates are found to earn more than their public school counterparts. This finding has important implications for the current debate over the effectiveness of private schools in South Asia. To the extent the wage premium arises owing to education in private schools, our result suggests relative superiority of private schools in Pakistan and are consistent with extant studies that have assessed private school quality using test scores of students. The difference in the performance of private schools in the two countries, however, remains a puzzle. This difference, we conjecture, may be partly explained by the between-country differences in public policy towards private schools and, therefore, the regulatory regime facing these schools.     

Public sector wage settlement and the threat of outsourcing

This paper investigates the impact of outsourcing on wage settlement in the public sector. The study characterizes the equilibrium wage offered by the public sector union to a government bureau competing against private sector firms. It is predicted that the union will offer a concession wage in an attempt to block outsourcing when its members' outside employment options are sufficiently unattractive and will offer a non-concession wage otherwise. The study contributes to the literature on outsourcing and wage determination in the public sector.     

Wage increases, wage convergence, and the Lewis turning point in China

We examine the wage trends of ordinary workers and the wage convergence between unskilled and skilled workers in China. First, we find that wages in all non-agricultural sectors, wages of migrant workers, and wages of hired workers in the agricultural sector have increased dramatically since 2003. Second, through comparing wage differentials between migrant and urban resident workers and between heterogeneous education groups within migrant workers, and by investigating the changes in the contribution of the returns to education to wage differentials, we find that the wages of unskilled and skilled workers have converged. Both the increasing wage trends and wage convergence are interpreted as evidence supporting the hypothesis that China has passed what can be called the Lewis turning point in the industrial sector. We conclude that the sustainability of economic growth in China requires an upgrading of labor market institutions to accommodate the merging of the rural and urban labor forces.     

Occupational Segregation and its Effect on Estimates of the Gender Wage Differential: Evidence from Brunei

This paper investigates the impact of the different occupational distributions of the gender groups on the gender wage differential in Brunei. We disaggregate occupational differences into explained and unexplained portions as this can provide better estimates of across-occupation and within-occupation wage differentials. Using data from the Brunei 1995 Labor Force Survey report, results indicated that the gender wage difference is approximately 60%. Unlike other studies, it is found that in Brunei the unexplained portion of occupational segregation has had an impact on gender wage differentials and accounts for approximately one-third of the observed gap. Interestingly, the unexplained component of the within-occupation gap is relatively less than in some developed economies. This is attributed to the effects of the large public sector in Brunei and its regulated pay scales.     

Earnings differentials between the public and private sectors in China: Exploring changes for urban local residents in the 2000s

This paper analyzes the changes in public–private sector earnings differentials for local residents in urban China between 2002 and 2007. We find that earnings gaps across ownership sectors decreased during this period and that the convergence trend has been in favor of the private and semi-public sectors as opposed to the public sector. This trend is in sharp contrast to what occurred at the turn of the 21st century when employees in the government and state-owned enterprises were found to enjoy a privileged situation. Differences in endowments are found to play a growing role in explaining earnings differentials. However, although it is becoming less of an issue, segmentation across ownership remains important, especially for high-wage earners.     

Investment in education in developing nations: Policy responses when private and social signals conflict

In most developing countries the net private benefit of higher education exceeds its net social benefit because education-related wage differentials are excessive and the beneficiaries of higher education are subsidized. The resulting political pressures seem to favor investment in education over the creation of employment opportunities. A more balanced allocation of investment may require the revision of basic policies dealing with wage determination, the incidence of educational costs and the role of private sector education. The aim should be narrow the gap between private and social signals and thus reduce excess private demand for higher education.     

Estimation of Public–Private Wage Differentials in Turkey with Sample Correction

The aim of this study is to determine how the change in the balance between public–private sector employments affected public and private earnings during the 1990s and 2000s in Turkey. We use the Oaxaca–Blinder and quantile decomposition methods to determine the wage gap between public and private sectors utilizing the 1994 Household Income Distribution and Consumption Expenditure Survey and the 2008 Household Budget Survey conducted by the Turkish Statistical Institute. The study determined that the primary difference in the average wages between sectors arises from the differences in the endowments without correction for gender. After adjusting for correction using quantile regression, we find that the difference in the endowments between sectors at lower quantiles explains the majority of the raw wage gap; whereas a substantial amount of the raw wage gap is explained by the sector effect at higher quantiles.     

Sectoral Wage Rigidities and Labour and Product Market Institutions in the Euro Area

We estimate wage Phillips curve relationships between sectoral wage growth, unemployment and productivity in a country-industry panel of euro area countries. We find that institutional rigidities – such as labour and product market institutions and regulations – limit the adjustment of euro area wages to unemployment, in both upturns and downturns, particularly in manufacturing and, to a lesser extent, in the construction and service sectors. In addition, there are further limitations in the response of wages to changes in unemployment during economic downturns which suggests that euro area wages are also characterised by significant downward wage rigidities, especially in the manufacturing sector. These results are robust to specifications that account for factors that may affect structural unemployment (such as duration-dependent unemployment effects), as well as changes in the skill composition of employment that may affect the evolution of aggregate wages. The results also hold for panels including or excluding the public sector (where wages may be determined differently to the private sector also due to the effects of fiscal consolidation on public sector wages during the crisis). From a policy perspective, reforms in product and labour markets which reduce wage rigidities can facilitate employment growth and enhance the rebalancing process in the euro area.     

Do Wages Continue Increasing at Older Ages? Evidence on the Wage Cushion in the Netherlands

In this study, we investigate the anatomy of older workers’ wages. The central question is whether the wage cushion—i.e., the difference between actual wages and collectively agreed-upon (maximum) contractual wages—contributes to the fact that wages continue increasing at older ages. We follow the wages of individual workers in twenty-two sectors of industry in the Netherlands using administrative data for the period 2006–2010. In the public sector, we find no evidence of a wage cushion. Wage scale ceilings set in collective agreements are guiding for older workers’ wages, and workers earning a contractual wage equal to a wage scale ceiling are not compensated with higher additional wages. In the private sector, we do find evidence of a wage cushion. Wage scale ceilings are less restrictive and workers earning a contractual wage exceeding the highest wage scale ceiling experience higher contractual wage growth. The private sector wage cushion enhances wage differentiation and allows for wages that continue increasing at older ages.     

Gender Discrimination and Worker Selectivity: A Comparison of the Self-employed and Wage Earners

This study compares the size and nature of the gender earnings differentials for the self-employed and wage earners in Korea, taking into account the workers’ self-selection of each employment type. The two-stage estimates of the earnings equation, corrected for worker selectivity, are used to decompose the gender earnings differentials into productivity-related and discriminatory factors. Our results suggest that the size of the gender earnings gap is larger in the wage sector than in the self-employment sector, but not by large margin, and so is the discrimination effect when not controlled for worker selectivity. With worker selectivity controlled, the discrimination effect is greatly intensified in the wage sector, while it becomes not significant in the self-employment sector. These findings imply that the observed gender earnings gap in the wage sector is largely ascribed to discrimination against women, while the gender earnings gap in the self-employment sector is mostly due to productivity difference that, in part, is caused by worker selectivity.     

Effects of New Deal Spending and the downturns of the 1930s on private labor markets in 1939/1940

Gross Domestic Product recovered much more quickly than labor markets did during the 1930s. We provide new analysis of this issue by estimating a cross-sectional model for individuals in 1939–1940 as a function of the measures of the Great Contraction of 1929–1933, the recovery, and the Second Dip Recession and average information for three types of New Deal spending. The results show that the Great Contraction of 1929–1933 and the Second-Dip Recession still had powerful negative effects on county labor markets in 1939/1940 and these were only partially offset by public works grants. Relief grants had somewhat negative effects although this might have arisen because of a large layoff of workers by the WPA in 1939. The AAA payments to farmers to take land out of production were associated with lower earnings and private employment, but had mixed effects on skill mobility.     

The Wage Gap between Men and Women in Botswana's Formal Labour Market

This study looks at the wage gap between men and women in Botswana'sformal sector labour market. The wage gap is decomposed usingOaxaca's decomposition methodology. This method breaks downearnings differences into two parts: one part is due to differencesin characteristics between men and women, while the other partis due to differences in rewards to those characteristics inthe labour market. The latter has often been interpreted asa measure of the extent of the discrimination against women.The results of the decomposition exercise shows that there isrelatively less discrimination in the public sector, while inthe private sector discrimination against women is a major factorexplaining the differences in their earnings.     

An empirical analysis of the gender earnings gap between the public and private sectors in Korea: A comparative study with the US

This paper conducts an empirical analysis of the gender earnings gap in the public and private sectors by comparing the cases in Korea with those in the US. Using comparable data sets by the Panel Study of Income Dynamics for the US and the Korean Income Panel Study for Korea, this study decomposes the gender earnings gap in order to identify the causal factors. One of the main factors attributable to a much lower gender earnings gap found in the Korean public sector is the self-selection by female workers with high levels of human capital who decide to enter the public sector. Another factor is the differing levels of efforts made by institutions, in areas such as wage structure, the enforcement of gender equality related laws, and the provision of paid family leave, which may affect differently the gender earnings gap in the public and private sector jobs. The empirical results of this study suggest that the differing levels of institutional efforts lower the gender earnings gap within the Korean public sector.     

Labour Market Flexibility,Wages and Incomes in Sub‐Saharan Africa in the 1990s

Abstract: This paper provides an overview of how African labour markets have performed in the 1990s. It is argued that the failure of African labour markets to create good paying jobs has resulted in excess labour supply in the form of either open unemployment or a growing self‐employment sector. One explanation for this outcome is a lack of labour market ‘flexibility’ keeping formal sector wages above their equilibrium level and restricting job creation. We identify three attributes of labour market flexibility. First, whether real wages decline over time; secondly, the tendency for wages to adjust in the face of unemployment; and thirdly, the extent of wage differentials between sectors and/or firms of various size. Recent research shows that real wages in Africa during the 1990s may have been more downwardly flexible than previously thought and have been surprisingly responsive to unemployment rates, yet large wage differentials between formal and informal sector firms remain. This third sense of the term ‘inflexibility’ can explain a common factor across diverse African economies — the high income divide between those working in large firms and those not. Those working in the thriving self‐employment sector in Ghana have something in common with the unemployed in South Africa — both have very low income opportunities relative to those in large firms.     

INSTITUTIONAL WAGE EFFECTS: REVISITING UNION AND BARGAINING COUNCIL WAGE PREMIA IN SOUTH AFRICA

The literature on the union wage gap in South Africa is extensive, spanning a range of data sets and methodologies. There is, however, little consensus on the appropriate method to correct for the endogeneity of union membership or the size of the union wage gap. Furthermore, there are very few studies on the bargaining council wage premium in South Africa because of lack of data on the coverage of employees under these agreements. Our study, using 2005 Labour Force Survey data, firstly reconsiders the union wage gap controlling for both firm‐level and job characteristics. When correcting for the endogeneity of union status through a two‐stage selection model and including firm size, type of employment, and non‐wage benefits, we find a much lower union wage premium for African workers in the formal sector than premiums reported in some previous studies. Secondly, our study estimates bargaining council wage premiums for the private and public sectors. We find that extension procedures are present in both private and public bargaining council systems but that unions negotiate for additional gains for their members at the plant level. Furthermore, there is some evidence that unions negotiate for awards for their members in the private sector irrespective of bargaining council coverage.