Public-private wage gap and determinants of sectoral employment choice

Abstract

This study investigates the wage gap between the public and private sectors in Brazil. The analysis is carried out with 2009 microdata from the National Household Sample Survey (PNAD). The main contribution of this study is an estimation method that corrects the selection bias in the choice of the employment sector and takes into account the PNAD complex sample design. This model allows for the identification of some of the factors that determine whether the individual participates in the labor market, and whether he enters the public sector or the private sector. The public-private wage gap is calculated by gender as labor supply varies significantly between women and men. The results show that public sector wages are higher than those in the private sector. In particular, educational level is an important factor that explains this wage gap.