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This study aims to empirically investigate the public-private wage differentials in Albania. The public/private pay differential in these countries is certainly an interesting issue to study given that the country has undergone in-depth restructuring of the economy, which requires understanding in particular the role of the public and private sector. To the best of our knowledge, this is the first attempt in empirically investigating the factors determining the public-private wage gap in the country. Using nationally representative data from the Albanian Living Standard Measurement Survey 2012, the double selection methodology in Heitmueller (2006) is employed in order to model the conditional mean wage regressions with sample selection corrections, as well as the quantile regressions approach following Chernozhukov et al (2013), in order to complement the findings along the entire distribution of wages. Following these, we employ the Oaxaca Blinder Decomposition technique to determine whether the wage gap is attributable to the differences in the individual’s characteristics or to the differences in the remuneration endowments or wage discrimination.

An empirical investigation on the public-private sector wage gap in Albania