Open AccessThe Public Pay Gap in Britain: Small Differences That (Don't?) Matter *
Author(s) -
PostelVinay Fabien,
Turon Hélène
Publication year - 2007
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/j.1468-0297.2007.02091.x
Subject(s) - political science , library science , economic history , media studies , sociology , economics , computer science
The existing literature on inequality between private and public sectors focuses on cross‐section differences in earnings levels. Forward‐looking agents, however, care about income and job mobility too, which we show are substantially different between the two sectors. Using data from the BHPS, we estimate a model of income and employment dynamics, allowing for unobserved heterogeneity in the propensity to be employed in either job sector. We detect a positive average public premium both in income flows and in the present discounted sum of future income flows. We also find that income inequality is lower but more persistent in the public sector.