Working papers

• • Public Sector Wage Gaps over the Long Run : Evidence from Panel Administrative Data
  Joint with O. Bargain & B. Melly (2018)
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  With the increase in national debts, pay freezes are imposed for several years in the public sector of some countries, at the risk of decreasing the quality of public services. Since public wage setting policies should account for relevant comparisons with the private sector, we provide novel evidence on the public sector wage gap throughout the wage distribution in France, taking a long-term perspective.

  We exploit a long administrative panel dataset (1988-2013) and suggest methodological innova­tions. We estimate the public sector premia/penalties on the unconditional wage distribution while accounting for quantile-specific fixed effects and a jack­knife correction for the potential incidental parameter bias. We find that the public wage gap is broadly negative in France, with larger penalties at the top, which con­tribute to a compression of the wage distribution by the public sector. We show that this com­pression effect is partly concealed by the incidental parameter bias. Time changes in the wage gap over 25 years are consistently explained by a mix of political and business cycles. The unobserved skill gap between sectors reveals the extent of positive selection into public jobs. It tends to decline in the 1990s, a period characterized by the growth of public employment and a move towards less selective recruitment schemes. More cri­tically, it totally disappears among top earners in the recent period, suggesting the detrimental effect of nominal wage freeze and the absence of performance-based re­muneration among public sector executives.

  Keywords :

  public sector

  wage gap

  unconditional quantile regression

  fixed effects
• • Informal Pay Gaps in Good and Bad Times : Evidence from Russia
  Joint with O. Bargain & B. Melly (2018)
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  Poverty and inequality have been rising since the great recession in Russia. An under-studied aspect is the role played by informal work, which is traditionally large but has further increased recently. To cha­racterize the heterogeneity of the labor force and the wage dynamics around the crisis, we undertake detailed estimations of the informal pay gap at the mean and along the distribution, relying on the Russian Longitudinal Monitoring Survey 2003-2015. Our approach com­prises three original features:

  • (i) we rely on unconditional quantile effects of informality (rather than on conditional wage gaps, more difficult to interpret);
  • (ii) we incorporate quantilespecific fixed effects using a tractable approach;
  • (iii) we suggest a treatment of the incidental parameter bias.

  Over the period, small informal wage penalties are found among the low-wage workers but do not suggest heavily segmented labor markets. An earning premium is observed for informal self-em­ployed in the upper half of the distribution. Important gender dif­ferences are observed.

  While individual fixed effects play no role for women, there is a substantial negative selection into informal salary work for men on average and particularly at low wages. It arises in the wake of the Great Recession, pointing to a shakeout of less productive wor­kers in the formal sector while low-tier informal employment tends to become more of a last resort option.

  Keywords :

  Russia

  informal employment

  wage gap

  unconditional quantile regression

  fixed effects

  incidental parameter bias

  jackknife