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A New Look at the Public Wage Premium in I taly: The Role of Schooling Endogeneity
Author(s) -
Ghinetti Paolo
Publication year - 2014
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/labr.12025
Subject(s) - endogeneity , wage , economics , public sector , labour economics , private sector , sample (material) , efficiency wage , hourly wage , low wage , work (physics) , demographic economics , econometrics , economy , economic growth , mechanical engineering , chemistry , chromatography , engineering
This paper uses a sample of male workers to estimate public and private wage structures and the public wage premium for I taly. Results from a model with endogenous sector and schooling suggest that public employees have on average lower unobserved wage potentials in both sectors than private employees, but work in the sector where they benefit from a comparative wage advantage. Schooling is positively correlated with wages in both sectors, and controlling for that is crucial to get more reliable estimates and predictions. The associated average unconditional public wage premium is 12 per cent. The net premium is 9 per cent, but not statistically significant.