An Analysis of Worker Sectoral Choice: Public vs. Private Employment

Abstract

This paper estimates the extent to which workers with different personal characteristics have differing probabilities of being located in public versus private sector employment. A reduced form two-way probit model is developed which analyzes worker choice between the public and the private sectors, along with a three-way probit model which breaks this down to a choice between private, federal and state-local jobs. Significant differences in the relationship between selection probabilities and worker characteristics are found between these three sectors and these differences are shown to vary in interesting ways across occupations. These results make it possible to characterize the type of individual who is most likely to be attracted to a job in the private, federal or state-local sectors and provide a more complete understanding of how workers perceive and respond to existing sectoral employment differences.