Does it pay to go public? : understanding the public-private sector wage gap in Germany

Using data from the German Socio-Economic Panel 1984-2017, this paper provides first evidence on the public-private sector wage gap in Germany based on a fixed effect quantile approach. The results reveal substantial differences in the decomposition of the gap compared to the standard cross-sectional approach. We find that women earn more in public employment, while men are penalized. Our analysis suggests that this penalization is not related to compensating wage differentials. Against the background of demographic change, the public sector may face difficulties to recruit (skilled) men and may need to adjust its pay schemes to fair and merit-based ones.