The Public Sector Wage Gap in Spain: Evidence from Income Tax Data

Abstract

This paper studies the public sector wage gap by gender and skill level in Spain using recent administrative data from tax records. We estimate wage distributions in the presence of covariates separately for men and women in the public sector and in the private sector. Then, we decompose the public sector wage gap along the wage distribution and isolate the part due to differences in the remunerations of observable characteristics. In line with previous literature we and that the public premium is higher for female and low-skilled workers. We also and that the shape of the distribution of the public wage gap is different among skill groups. Finally, recent cuts in public wages in Spain have affected the public premium quite differently across skill groups: interestingly, while the public wage gap decreased between 2007 and 2010 for low-skilled workers, it even increased in the case of high-skilled workers at the top of the wage distribution. Assuming that private wages evolved similarly across skill groups, this finding might point to a brain drain from the public to the private sector.