Public/private sector wage differentials in Canada-evidence from the 1991 and 1982 surveys of consumer finance

Abstract

This paper extends the work of Gunderson and Shapiro and Stelcner that considered wage differentials between public and private sector workers in Canada using the 1971 and 1981 Censuses, respectively. Here the Survey of Consumer Finances from 1991 and 1982 is used, which allows for better distinction between public and private sector workers. The estimated public sector premium is decomposed into an endowments component and a residual term. Estimates are corrected for sample selection bias with respect to the choice between full-time and part-time work in the two sectors. Tests for bias caused by self-selection into the private and public sectors revealed no such bias. As a benchmark, the overall wage premium calculated for 1981 compares very well with that of Shapiro and Stelcner. During the 1980s no significant increases in the public sector wage premium for males are found but the female premium increased significantly. This may be due to changes in pay equity legislation in the public sector relative to the private sector.