STATE AND LOCAL-GOVERNMENT WAGE DIFFERENTIALS - AN INTRASTATE ANALYSIS

Previous estimates of state and local government wage differentials ha ve been typically based on data aggregated across all states, and such aggregation may produce seriously misleading differential estimates. We estimate intrastate earnings differentials for the state and local sectors in Wisconsin, four other midwestern states, and two states out side the midwest. There is substantial variation in the differentials: aggregated differentials can be misleading. Our work also confirms th at state and local government labor markets have reduced earnings disp ersion and investigates the possibility that higher public sector earn ings may attract an ''over-qualified'' work force.