Earnings of Public Sector and Private Sector Employees in Australia: Is
there a Difference?.
by
Jeff Borland, Joe Hirschberg, and Jenny Lye.
April 1996
Department of Economics. University of Melbourne. Parkville Victoria
3052 Australia
ABSTRACT
This study examines differences in average weekly earnings between
public sector and private sector employees in Australia. It is found that
- in aggregate and for most one-digit occupation groups-male and female
public sector employees have significantly higher average weekly earnings
than private sector employees. A variety of decomposition tests are applied
to examine the sources of the inter-sector difference in average earnings
using a detailed earnings model. The tests generally show that higher average
earnings of public sector employees are wholly explained by differences
in average characteristics of employees and jobs in each sector. Differences
in returns to characteristics, by contrasts, have the effect of increasing
average earnings of private sector employees relative to public sector
employees. There is little evidence that earnings of public sector employees
are higher in occupations which are unique to the public sector.
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