Decomposition of the wage gap between workers of public and private sectors in Argentina

• Main Authors: Juan Pablo Carranza, Carlos María Lucca
• Format: Article
• Language: English
• Published: Universidad Nacional de Córdoba (UNC) 2016-12-01
• Series: Revista Administración Pública y Sociedad
• Subjects: brecha salarial; empleo público y privado; Blinder-Oaxaca.
• Online Access: https://revistas.unc.edu.ar/index.php/APyS/article/view/15306

The article analyzes differences between hourly wages in private and public employment in Argentina, based on aspects usually considered as components of worker human capital (such as education, experience or skills) along with other personal characteristics or with the environment where the worker performs his tasks (such as the premises size or region where its located). Panel-data for the 2011-2015 period was built in order to analyze the gap between public and private employment average hourly wages. The Permanent Household Survey database prepared by the National Institute of Statistics and Census was the source of information. The Blinder-Oaxaca technique was applied, that breaks the wage differential into two groups, a part explained by characteristics of each group which are assumed to have some impact on productivity, such as education or work experience; and a residual part that cannot be explained by the former differences in human capital staffing. We conclude that 68.9% of the earnings’ differential (in absolute value) in favor of public employment is explained by higher human capital endowments of the workers in this sector. The effect of the coefficients (commonly associated with discrimination between sectors) explains only 12.4% of the observed hourly wage differential. The interaction term which is associated with structural factors of each of the analyzed labor markets (public or private), explains 18.7% of the hourly wage gap.