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The public sector wage premium puzzle

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journal contribution
posted on 2022-02-15, 16:31 authored by Yi Wang, Peng Zhou
This paper investigates the public sector wage premium in the UK over the first decade of the 21 st century using both econometric and economic modelling methods. A comprehensive literature review is conducted to summarise the four popular types of methods adopted by the traditional microeconometric studies. Application of these methods results in an estimated public sector wage premium equal to 6.5% . Indirect inference is then introduced as a new method of testing and estimating a microfounded economic model. All four types of econometric methods can be used as auxiliary models to summarise the data features, based on which the distance between the actual data and the model -simulated data is assessed. The selection bias can also be tested in a straightforward way under indirect inference


Published in

International Journal of Computational Economics and Econometrics




  • AM (Accepted Manuscript)


Wang, Y. and Zhou, P. (2019) 'The public sector wage premium puzzle', International Journal of Computational Economics and Econometrics, 9(4). DOI: 10.1504/IJCEE.2019.10021464

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Cardiff Met Affiliation

  • Cardiff School of Management

Cardiff Met Authors

Yi Wang Peng Zhou

Cardiff Met Research Centre/Group

  • Welsh Centre for Business and Management Research

Copyright Holder

  • © The Publisher


  • en

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