The Public Sector Wage Gap: New Evidence from Panel Administrative Data
About the ESRI Seminar Series
The ESRI organises a public seminar series, inviting researchers from both the ESRI and other institutions to present new research on a variety of public policy issues. The seminar series provides access to specialised knowledge and new research methodologies, with the objective of promoting research excellence and facilitating productive dialogue across the policy and research fields.
Guest Speaker: Olivier Bargain, Professor of Economics at the University of Bordeaux
Venue: ESRI, Whitaker Square, Sir John Rogerson’s Quay, Dublin 2.
With the increase in national debts, the salary cost and productivity of civil servants are under scrutiny. However, public wage setting policies should account for relevant comparisons with the private sector. We suggest novel evidence for France by conducting a comprehensive assessment of the public sector wage gaps throughout the distribution and over the long period. We exploit a very large panel of French salary workers drawn from administrative data for 1988-2013. We estimate the public sector premia/penalties on the unconditional wage distribution while originally accounting for fixed effects and a jackknife correction for potential incidental parameter bias. The public wage gap is broadly negative in France, with larger penalties at the top, which contributes to a compression of the wage distribution by the public sector. This equalizing effect is revealed when the incidental parameter bias in standard fixed effect quantile estimations is corrected for. Time changes since 1988 are consistently explained by a mix of political and business cycles. The unobserved skill gap between sectors tends to decline in early years due to less less-selective recruitment schemes. It totally disappears in the recent period, suggesting the detrimental effect of nominal wage freeze and the absence of performance-based remuneration among public sector executives.
Olivier is Professor of Economics at the University of Bordeaux and member of the 'Institut Universitaire de France'. He is also a Research Fellow at IZA and LISER. His research covers topics in public & labor economics, development & family economics, wine & international economics. He is currently associate editor of the Journal of Economic Inequality, and previously coeditor of the book series Research in Labor Economics. He is a member of the Council of Economic Advisors to the French Prime Minister.