More on the Public/Private Wage Gap

The CSO has released a multivariate analysis of the 2007 National Employment Survey which shows broadly similar results to the recent ESRI study (which used data from the 2003 and 2006 surveys). I imagine that next week’s ESRI seminar should stimulate some interesting debate on this important topic.

10 replies on “More on the Public/Private Wage Gap”

Am I wrong or is this being reported by the media as the public-private wage gap? I believe there was some comment on it in the Indo today.

Correction, I meant to type “Is this being reported by the media as the CURRENT public-private wage gap?”


It doesn’t matter what the report is actually about, what it shows, what data it uses. What matters is that it’s being released now (and not, say in 2008) and that it allows those who are orchestrating this jihad to fan the emotions of those who are already distraught and to direct their wrath toward the preferred enemy.

Don’t you know? We’re borrowing €400 million a week just to pay PS salaries!!!

That NAMA thing you’ve heard about? Don’t worry, we don’t really have to pay for that….

Its nice to see the CSO conduct a more sophisticated analysis of data. At a glance, it looks like they have done a good job. However in the quantile regressions they make a common error of interpretation saying that the premium is higher or lower at different points of the earnings distribution. This is not what quantile regressions show you: these refer to points in the conditional not the unconditional distribution. You could be high in one but low in the other (essentially, depending on your unobserved ability). See Arias et al (2001) Empirical Economics, 26:7-40.

It would seem from the data presented by the CSO that:

(i) Between 2006 and 2007, private sector pay has risen relative to public sector pay, and,

(ii) The premia for October 2007 are about 3% to 5% higher than the levels recorded in March 2003 by Murphy and Ernst and Young (2007). They are lower than the March 2006 premia reported by Kelly et al. (2009) at the ESRI.

The CSO report (Table 2a, page 17, Blinder-Oaxaca results with establishment / firm size as an explanatory variable) finds that for full-time, permanent employees aged 25 to 59 years the premia are 12.6% (males & females), 10.4% (males) and 15.1% (females). When firm size is excluded, the premia in Table 2b are 16% (males & females), 13.7% (males) and 19.2% (females).

My corresponding figures for males & females for March 2003 and March 2006 were approximately 13% and 20% (based on a slightly smaller set of explanatory variables and excluding semi-state bodies).

@Ernie Ball “those who are orchestrating this jihad “.

You are not wrong there Ernie. Why do you think they call PR the “dark side”?

As for the media reporting it as the ‘current’ public-private wage gap…….

…that’s because a lot of journalists are either lazy or overworked (mutually exclusive states of being) and simply cut-and-paste press releases and copy from PR companies. It just makes me cringe when I see that (e.g. a press release I’ve seen that then appears verbatim with some hack’s name stuck next to it as though he/she wrote it themselves.

There would seem to have been some narrowing of the public-private sector wage gap between March 2006 and October 2007.

The model estimated by Elish Kelly, Seamus McGuinness and myself, which excludes the organisation-size dichotomy from the model on the grounds that that more than 97% of public sector employees work in large organisations, shows an average public sector premium of 21.6%, 22.5% for males, 21.4% for females in March 2006. (see The equivalent CSO estimate using the same specification (Table 2b), shows an average premium of 20.1%, 19.2% for males and 21.4% for females in October 2007. This shift is not surprising given the tight labour market at the time.

On first reading your post I was a bit surprised – since it seemed on the surface to be saying private sector were being paid more that public. Of course on rereading your post, I see that is not what you said at all.

The bit I read says:
“The multivariate analysis of the data shows a premium of 19.1% for public sector employees, i.e. when differences in individual and employment characteristics are controlled for, public sector employees are paid on average 19.1% more than private sector employees. Further analysis based on gender yields a public sector wage premium of 14.8% for males and 22.9% for females.”

Odd the things different people get from the same document. As Churchill said ” there are lies, damn lies and statistics..”

For many people in the public sector the chances of being laid off are effectively zero so that’s worth a few quid. Given a plausible estimate of, say, relative risk aversion one could add that into the calculations?

TPTB need to keep disunity rampant otherwise the serfs tend to ask the questions that cause TPTB to be replaced by others who become the new PTB.

So discord of all types is vital.

Drug war? Ever heard of the evils of drink? Prohibition was a wonderful western movement that lasted 70 years. Until it no longer mattered. Did it ever? If you like to think for yourself, then maybe you too can come up with other examples of what is designed and encouraged to divide us?

Most posting here are capable of being TPTB. Many reading it also. Those who cannot operate PCs are hereditary serfs. Reality intrudes. Political correctness is designed to keep serfs in line. So if what I just said offends you, please stop trying to go beyond your station ……

Some issues actually matter more than the depression! It, (what exactly?) has been designed to accomodate many interests, and is a fascinating thing. Wars, famines, these are particularly familiar to the Irish, for some reason.

But as information increases, more become aware. That things are not as they are said to be. Things happen, such as Nama is about to (or is it?) that should not. Good luck finding answers. Join with others on the quest, knowing that some of them know more than they say and are there to report back to others …! Or get on with being a serf. Serfdom can be unpleasant particularly when in a depression. Those who do not believe what I have written should just ignore it. It will go away. But others should find what is true and cherish it as it is under threat as never before

I did not claim to be sane!

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