The gender wage gap in the public and private sectors in Canada

Abstract

The Canadian labour market experienced a considerable decline in the male-female pay gap during years 1988 to 1992. After 1992, however, the gender wage gap decreased only slightly. This paper will study the issue of difference in the explained gender wage gap in both the public and the private sectors and will examine the components of change in the wage gap between 1991 and 1996. We measure and decompose the gender wage differentials into explained and unexplained parts separately for the public and private sectors in Canada for the census years 1991 and 1996, and compare changes in the earnings gap between 1991 and 1996 in both sectors. The analysis is based on Oaxaca decomposition and Juhn-Murphy-Pierce decomposition techniques. Results show that gender wage differentials are present in both sectors, although at a lower level in the public sector than in the private sector. In 1996, 67 percent of the wage gap is attributable to the unexplained part in the public sector, while in the private sector, this figure is 76 percent. Generally, males tend to have higher return to experience and more favorable occupation and industry distributions, which can account for the gender wage gap. Our findings also show that the overall gender wage gap decreases in both the public sector and the private sector between 1991 and 1996. This decrease is mainly attributed to the diminishing of the unexplained portion. In both the public and the private sectors, improvements in women’s wage-determining factors and ranking relative to those of men contributed to a narrowing of the gender wage gap.