The pattern and evolution of geographical wage differentials in the public and private sectors in Great Britain

Abstract

Government policy on the nature of wage bargaining in the public sector can have important implications for the provision of public services. Using the New Earnings Survey, the Labour Force Survey and the British Household Panel Survey, we examine the size and evolution of public-private sector wage differentials across geographical areas within the UK and over time. Public sector bargaining structures have led to historically high wage premia, although these premia are declining over time. In high-cost low-amenity areas, such as the south-east of England, the public sector underpays relative to the private sector, therefore creating problems in recruitment to and provision of public service..