Wage Dispersion, Public Sector Wages and the Stagnating Danish Gender Wage Gap.

The Gender wage gap in Denmark has virtually stagnated since the early 1970's. This study examines whether this stagnation is mainly due to a changing wage dispersion or to changing prices on observed and unobserved skills. Since about half of the female labour force is employed in the public sector, the impact of the changing wage structure between the public and private sectors is investigated. The analysis is based on the Juhn-Murphy-Pierce decomposition applied to a pooled wage regression model. The equivalence between the former and the Oaxaca-Ransom generalized wage decomposition is established. These techniques are applied to a sample of Danish wage earners in the period 1983-94. The decomposition results suggest different explanations bethind the stagnation of the gender wage gap in the public and private sectors. The development in average public sector wages is calculated assuming observed and unobserved private sector prices are in effect.