The Public-Private Pay Gap in the Czech Republic

This article analyzes the public-private pay gap in the Czech Republic. To prove the existence of this pay gap and measure for its decomposition, we used Mincer wage equations and Blinder-Oaxaca-based decomposition techniques. Using data from the IV/2012 Quarterly Survey of Average Earnings, an econometrical model intended for regression and decomposition analyses was set. The most important part of the model is the dummy variable representing pertinence to the public sector of the national economy. We found that this dummy was statistically significant throughout the wage distribution, and that the value of its coefficient was negative and rising. This means that public sector employees up from the lowest deciles can be discriminated against in their salaries, and that this potential for discrimination increases as we look at the higher deciles. This finding was further examined by decomposition analysis which showed that on average, public sector employees are better equipped (have better characteristics) but have worse return on them (lower regression coefficients).