Public private sector wage differentials in Canada - evidence from the 1991 and 1982 surveys of consumer finance

This paper extends the work of Gunderson and Shapiro and Stelcner that cons idered wage differentials between public and private sector workers in Cana da using the 1971 and 1981 Censuses, respectively. Here the Survey of Consu mer Finances from 1991 and 1982 is used, which allows for better distinctio n between public and private sector workers. The estimated public sector pr emium is decomposed into an endowments component and a residual term. Estim ates are corrected for sample selection bias with respect to the choice bet ween full-time and part-time work in the two sectors. Tests for bias caused by self-selection into the private and public sectors revealed no such bia s. As a benchmark, the overall wage premium calculated for 1981 compares ve ry well with that of Shapiro and Stelcner. During the 1980s no significant increases in the public sector wage premium for males are found but the fem ale premium increased significantly. This may be due to changes in pay equi ty legislation in the public sector relative to the private sector.