PUBLIC AND PRIVATE-SECTOR WAGES OF MALE WORKERS IN GERMANY

We analyze several statistical assumptions used in empirical models on public-private sector wage structures. Based on data for Germany, whi ch contain a large range of background variables usually not available in other studies, we investigate the sensitivity of results to variou s specification and identification assumptions. The standard switching regression model is extended to allow for endogeneity of education le vel, experience, and hours worked. These extensions lead to considerab ly different parameter estimates. We compare conditional and unconditi onal wage differentials between the public and the private sector for the various specifications. These differentials are sensitive to ident ification assumptions, but robust across specifications which do and d o not allow for endogeneity of education, experience, and hours worked . (C) 1998 Elsevier Science B.V. All rights reserved.