Examining Equality between Public‐ and Private‐Sector Wage Distributions

Most comparability studies examine average pay differences, but this article explores differences in the distribution of public‐ and private‐sector wages. Applying a new type of decomposition method, the results indicate that the difference in average wages is only a small part of wage incomparability, whereas differences in the variance of the differential are a much more important factor explaining incomparability. Further results find that differences in wage structure and unobservable factors determining wages have distinct effects in different parts of the wage distribution.