What keeps public sector workers in low-paid jobs? The role of self-selection and non-cognitive skills in explaining the public-private wage gap

This paper examines whether non‐cognitive skills (personality traits and risk attitudes) influence self‐selection into employment the choice between public private sectors and, if so, how they relate to wages in each sector. The methodology combines multinomial logistic regression model patterns of selection with an Oaxaca–Blinder‐type decomposition intersectoral wage gap. I find that personality have a substantial effect on preferences towards They significant, albeit small, both sectors. magnitude these effects is same across do not contribute gap at mean. At time, accounting for endogeneity sectoral attainment eliminates gap: 2016, unexplained conditional can be completely attributed self‐selection.