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Generalized switching regression analysis of private and public sector wage structures in Germany
Dustmann,C. van Soest,A.H.O.
Dustmann,C.
van Soest,A.H.O.
Abstract
This paper analyzes wage structures in the public and the private sector for Germany. The data contains a rich set of variables on parents' characteristics that we use as instruments. We extend the empirical literature in this field by endogenizing education level and hours worked, and by using life cycle wage differentials in the structural selection equation. We show that these extentions significantly improve the standard model. Moreover, they lead to considerably different parameter estimates. We compute conditional and unconditional wage predictions for the various specifications using model simulations. We find that, on average, potential wages in the private sector exceed those in the public sector. Those actually working in the public sector, would do somewhat better in the private sector, while those working in the private sector would earn much less in the public sector.
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Pagination: 29
Date
1995
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Unknown Publisher
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Keywords
Regression Analysis, Public Choice, Wage Differentials, labour economics, J31 - Wage Level and Structure ; Wage Differentials, C34 - Truncated and Censored Models ; Switching Regression Models, SDG 8 - Decent Work and Economic Growth, SDG 10 - Reduced Inequalities
Citation
Dustmann, C & van Soest, A H O 1995 'Generalized switching regression analysis of private and public sector wage structures in Germany' CentER Discussion Paper, vol. 1995-44, Unknown Publisher.