Public–private wage differentials in Tunisia: Consistency and decomposition

Abstract In this paper, we estimate and decompose the public–private wage differentials for urban areas, using the 2012 Tunisia urban youth survey. Oaxaca decomposition results suggest that, on average, public sector workers earn more than their private counterparts. Additionally, the results indicate that a substantial part of the conditional gap in urban areas can be attributed to observed characteristics. Human capital, particularly education, are the main reason behind the observed log‐wage advantages. Using unconditional quantile decomposition, our findings reveal that, for urban areas, the discrimination effect becomes more pronounced at the upper quantiles of the wage distribution. Separate analyses by gender and educational levels show that male workers across both sectors receive higher compensation than their female counterparts, with a more pronounced gender gap in private sector. Less educated workers are compensated much more in the public sector than in the private sector, while the wage differential for skilled workers decreases rapidly through the distribution.