Public-private wage differentials in Turkey: public policy or market dynamics?

We evaluate public-private sector wage differentials in Turkey for the years 2005 and 2011, a period marked by educational upgrading and restructuring in public employment. Using micro data from Household Labour Force Surveys we find a positive premium for low wage earners and a penalty of working in the public sector at the higher end of the distribution. Although the penalty has not disappeared, the price effect has increased, especially at the end of the distribution owing to a relatively uneven wage increase in the private sector along the distribution, rather than an explicit public wage policy.