Decomposing the Public-Private Wage Gap for Nurses in the Philippines

Abstract

In this study, we investigate the determinants of the public-private sector wage gap among nurses in Pampanga, Philippines. Using two estimation methods followed by a Oaxaca-Blinder decomposition of the wage differential, we study the extent to which this gap can be accounted for by differences in human and social capital endowments versus unexplained differences. Education, work experience, and active participation in the professional nursing association were found to have a significant effect on wages. Results of the Oaxaca decomposition highlight the bifurcated nature of the nursing labor market. Nearly 42% of the public-private wage differential was “unexplained” by differences in worker characteristics, suggesting that a significant portion of the gap may be attributed to differences in wage-setting regimes, market structures, and worker incentives between the public and private sectors.