Between 1940 and 1950 wage differentials within and between labor market groups narrowed significantly - the so-called 'Great Compression'. This paper disaggregates the Great Compression into its public and private components. Wage compression in the public sector, along with a decline in the pay premia received by public sector workers, explains about 40 percent of aggregate wage compression in the 1940s. The experience of the 1940s stands in stark contrast with that of the past two decades, in which a rigid public sector wage structure has dampened increases in aggregate wage inequality

Public-Private Wage Differentials and Interactions Across Countries and Time

Monograph on public sector wage structure trends and wage determination issues in the UK - discusses public expenditure and employment growth, collective bargaining, trade unionism, declining resort to arbitration, manual worker and nonmanual worker wage differentials, impact of incomes policies, etc., provides comparisons with the private sector, and includes civil servant and public servant wages. Graphs and references.

This paper uses data from the U.S. Decennial Census and the Current Population Surveys to document the differential shifts that occurred in the wage structures of the public and privatesectors between 1960 and 2000. The wage gap between the typical public sector worker and a comparable private sector worker was relatively constant for men during this period, but declined substantially for women. Equally important, wage dispersion in the public sector was increasing relative to wage dispersion in the private sector prior to 1970, at the time when public sector employment was rising rapidly. Since 1970, however, there has been a significant relative compression of the wage distribution in the public sector. The different evolutions of the wage structures in the two sectors are an important determinant of the sorting of workers across sectors. As a result of the relative wage compression, the public sector found it increasingly more difficult to attract and retain high-skill workers

This paper examines the changes over time in public sector wages and employment relative to private sector wages and employment using data from surveys of establishments and individuals. The paper finds that:(1) The pay of public sector workers relative to private sector workers varies greatly over time. Contrary to the view that public sector payis inflexible, variations in relative pay are due as much to fluctuations in public pay as to fluctuations in private pay.(2) The relatively high paid public sector worker of the early 1970s has within the span of a decade lost much of his or her advantage over otherwise comparable private sector workers, seriously denting if not destroying the picture of the 'overpaid' public employee which developed in the early 1970s.The group of public sector workers who tend to be most highly paid in the U.S. relative to private sector workers are blacks and women, suggesting that the public sector discriminates less than does the private sector.(3) Differentials in public and private sector pay vary greatly depending on the nature of comparisons, with for example Current Populations Survey comparisons of individuals with similar broad human capital showing federal employees to be higher paid than private employees and Bureau of Labor Statistics surveys of wage rates in particular occupations showing federal workers to be lower paid.(4) Public sector employment follows a very different pattern of change than private sector employment. It has smaller annual variation, and moves counter cyclically rather than cyclically. In terms of demographic composition the public sector employs relatively more blacks and women than the private sector.