The gender wage gap and the moderating effect of education in public and private sector employment

Abstract

In many countries, the rules and statutes governing public employment promote both transparency and accountability in employee hiring, promotion, and wage setting. These aspects of public employment might mitigate the pay inequalities women face in the public workplace relative to the private sector. At the same time, these formal aspects of public sector employment and payment systems might also limit the ability of women in the public sector to leverage human capital increases as a means of reducing pay inequalities. Utilizing 25 years of employee‐level data from Denmark, we find that women professionals in the Danish public sector face a smaller wage penalty than their private sector counterparts. However, our findings also suggest that public employment may place structural limits on their ability to leverage educational attainment to close the gap even further.