This paper examines wage differentials between public sector and private sector workers in Australia. After controlling for observed characteristics and individual fixed effects, we show that on average workers in the public sector earn about 5.1% percent more hourly wages than those in the...

The logic of human capital theory implies that the present values of lifetime earnings are computed using the discount rate applied by individuals when making their labor market choices. Further, inequalities will appear when higher or lower discount rates are applied. Our empirical tests...