Academic journal article Public Administration Quarterly

Effects of Changed Wage Setting Conditions on Male-Female Wa

Academic journal article Public Administration Quarterly

Effects of Changed Wage Setting Conditions on Male-Female Wa

Article excerpt


Comparisons of observed wage rates by gender generally reveal that females receive lower wage rates than males.(1) Empirical studies analyzing the determinants of underlying gender wage differentials suggest at least two major explanations for these differentials. First, differentials are due to occupational segregation, i.e., males do work that is better paid than the work done by females. A second explanation is gender differences in the acquired amount of human capital (education, work experience). Males have better opportunities to invest in their human capital and so in their earnings capacity, than females. The reason for this is that labor market careers of women are often interrupted for several years because of childbirth.(2)

At the same time, the common experience in all empirical studies is that, although such gender differences are controlled for in the analysis of male-female wage differentials, there still remains a significant "unexplained" wage differential between the sexes. As often as not, these "unexplained" differentials are interpreted as resulting from "wage discrimination."

Many studies based on U.S. data have reported evidence that male-female wage differentials are smaller in the public sector than they are in the private sector.(3) Siv Gustafsson (1976) reports similar findings in the Swedish labor market. These findings also suggest that the degree of wage discrimination against females is smaller in the public sector than in the private sector. One explanation is that the institutional conditions for wage determination differ in the two sectors. "The highly structured nature of government employment with civil service and/or collectively bargained work rules often requires equal pay for all individuals with the same seniority and qualifications who are employed in a given job. Thus, discrimination can primarily take the forms of slower promotion rates or unequal access to initial jobs, not of unequal pay for equal work" (Ehrenberg and Schwarz, 1986:1252; See also Pedersen et al., 1990). However, to what extent wage setting for males and females is affected by institutional arrangements and, also, whether the shaping of institutional arrangements is of importance for wage discrimination, are still unexplored issues.

During the 1980s, the institutional framework for wage determination in the Swedish public sector changed radically. It has adjusted toward the rules governing wage determination in the private sector. This gives rise to the issue of whether or not these changes have also implied an adjustment of the male-female wage differentials in the public sector towards the differentials prevailing in the private sector. If the wage setting conditions for males and females are affected by institutional conditions, then the effect of these institutional changes would imply that the development of relative wages in the public sector is similar to the private sector. The purpose of this article is to investigate the empirical support for this hypothesis.

The main conclusion is that wage differences between males and females in the public sector seem to have widened in the last years of the 1980s. At the same time, there was a tendency toward decreasing wage differentials by gender in the private sector. These observations suggest that the changed institutional rules of the game in the public sector could affect male-female wage differentials to the disadvantage of females and, as a consequence, contribute to increased wage discrimination in the Swedish labor market.

The rest of this article proceeds as follows: Section 2 briefly discusses some potential channels of institutional influence on wage structure. Section 3 provides a background to why institutional conditions for setting wages in the Swedish public sector have changed during the 1980s. In Section 4, the author reports some estimates of standardized male-female wage differentials in the private and public sectors. …

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