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Changes in Public and Private Sector Wage Structures in Two Emerging Market Economies during the Crisis

This paper estimates public-private sector wage differentials using an extension to the Oaxaca- Blinder method based on Recentered Influence Function (RIF) regressions and reweighting in two emerging market economies - Croatia and Serbia - between 2008 and 2011. The main results indicate that there was a wage premium in the public sector for both countries and in both years. The paper shows that the private sector in both countries adjusted wages relative to the public sector more at the bottom than at the top of the wage distribution, which led to an increase in the relative public sector wage compression, especially in Croatia.

public-private wage gap; recession; unconditional quantile regression; recentered influence function regression; decomposition; Croatia; Serbia

Presenter: Ivica Rubil