Wage development at employee level – comparison between the public and private sectors

Abstract

We analyze Finnish wage dynamics in the private, municipal, and state sectors. Our analysis is based on extensive employee-level data, which allows us to distinguish wage growth for different worker groups based on both employment status and level of education. We examine annual wage changes in three worker groups: stayers, occupation switchers, and employer switchers. Employees are divided into four groups based on education: only basic education, vocational school, lower university degree, and higher university degree. We observe that the wage growth of those switching occupation or employer is typically significantly larger than that of stayers, and this difference is larger the higher the level of education. The wage advantage for those switching employers is the largest in the state sector. In our analysis, we observe a clear positive relationship between wage growth and employment (measured by the number of hours worked relative to the working-age population [20–69 years old]). This connection is particularly significant in the private sector and among those switching jobs.

• ISSN: 2242-6914
• ISBN: 978-952-209-203-8
• JEL: E24, J31, J45, J63 
• Publication in PDF-format