Understanding the public sector pay gap

Table 11 Determinants of the public administration pay gap

	(1)	(2)	(3)	(4)	(5)	(6)
Dep. variable: public administration (industry O) wage gap (2004–2012)
% Public administration	−0.0184^∗	−0.0130	−0.0190^∗	−0.0208^∗∗	−0.0140	−0.0198^∗∗
employees (over total employees)	(0.0103)	(0.0135)	(0.0100)	(0.0085)	(0.0108)	(0.0088)
% Public administration	0.0086 ^∗∗	0.0056	0.0085 ^∗∗∗	0.0074 ^∗∗∗	0.0084 ^∗∗∗	0.0089 ^∗∗∗
employees (over public employees)	(0.0032)	(0.0050)	(0.0030)	(0.0023)	(0.0022)	(0.0022)
% Value added tradable	−0.0046	−0.0041	−0.0047^∗	−0.0051^∗∗	−0.0044^∗∗	−0.0045^∗
sectors	(0.0030)	(0.0037)	(0.0026)	(0.0021)	(0.0020)	(0.0023)
Employment protection	0.0018
legislation	(0.0373)
Trade union density		−0.0010
Debt					−0.0007
					(0.0004)
Real GDP growth						0.0032
						(0.0081)
Constant	0.0818	0.1589 ^∗	0.1761	0.1534 ^∗∗	0.0918	0.0881
	(0.0880)	(0.0858)	(0.3863)	(0.0546)	(0.0715)	(0.0676)
Observations	22	21	24	23	24	24
Adjusted R-squared	0.22	0.24	0.35	0.37	0.41	0.35

Notes: This table shows the correlation between the Public Administration pay gap and country characteristics linked to the government monopolistic power in the provision of public services, the labor market institutions, and the business cycle. This is a table analogous to Table 9, but the wage gap is that of the Public Administration (industry O) vs. the rest of the economy, whereas in Table 9, it is that of the NACE proxy to the government sector (industries O, P, and Q) vs. the rest of the economy. The presence of the private sector is negligible in industry O, whereas it can have a large presence in industries P and Q, depending on the country. Robust standard errors are in parenthesis
Significance levels: ^∗10%; ^∗∗5%; ^∗∗∗1%