Flying High and Laying Low in the Public and Private Sectors: A Comparison of Pay Differentials for Male, Full-Time Employees

Using linked employee-employer data, this paper shows that, on average, male full-time public sector employees in Britain earn 8.9 per cent more than their private sector counterparts. Analysis reveals that the majority of this pay premium is associated with public sector employees having individual characteristics typically associated with higher pay, especially working in higher paid occupations. Further focussing on the highly skilled and unskilled occupations in both sectors reveals evidence of workplace segregation positively impacting on earnings in the private sector for the highly skilled, and in the public sector for the unskilled. Substantial earnings gaps between the highly skilled and unskilled are found in both sectors; and the unexplained components in these gaps are shown to be very similar regardless of sector.