Analyzing the Public Private Sector Wage Gap Using Difference-in-Differences

Abstract

This paper estimates the differential between wages in the private and the public sectors using the difference-in-differences method. The method relies on estimating the wage changes of those that move from one sector to the other, that is, from the public sector to the private sector or from the private sector to the public sector. We find that the wages fall by 6-12% between years for those that move from the private sector to the public sector in either 2015 or 2016, while wages increase by 7-10% between years when moving from the public sector to the private sector in either 2015 or 2016.