Men show a greater preference than women for working in the private sector, where their workplace skills are more likely to be rewarded with higher pay than they can expect to get in the public sector, a Bank of Israel study released on Sunday showed.
The study, which looked only at college-educated employees, found that workers in both sectors enjoyed some pay advantage but the gap between the most and least skilled was wider in the private sector, said Yuval Mazar, who conducted the study for the central bank’s research department.
As a result, the most skilled Israeli men – much like their counterparts in other countries belonging to the Organization for Economic Cooperation and Development – showed a strong preference for private-sector employment, whereas Israeli women with similar skills did not.
Mazar’s research didn’t address the reasons why that should be the case, but he noted that the results were in line with other studies that showed women had a preference for job security over compensation and prefer a less competitive work environment.
Women, who account for about two thirds of all public sector employees in Israel, may also find a better match for their job skills and preferences in the public sector than men do, the report said.
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“You have to remember that pay in the public and private sectors is determined in different ways,” Mazar explained. “Wages in the public sector are set by wage tables, connected with the worker’s profession, rank and seniority relative to his basic salary.
“By comparison, pay in the private sector is based on the marginal rate of productivity – the more productive a worker is, the more his salary rises,” he said. However, even in the public sector, women get compensated less for their skills than their male peers.
Mazar’s study was based on three basic skills sets – for solving math, language-related and computer-related problems that has been used across the OECD as well as the Central Bureau of Statistics to assess the overall labor force’s skills.
“These skills involve workers’ basic competencies – most of them are acquired before they join the workforce whether at school or at university or even in kindergarten,” Mazar said. Higher skills are assumed by economists to generate more productive workers, who can be paid more.
The relative lack of skills in the public sector in general comes as a surprise, as the sector tends to employ more people with a doctorate or better, like teachers and doctors. The skills gap between the two sectors applied to male and female employees, the report said.
Not all countries showed the same gender-based preferences for private versus public sector employment. In countries such as Britain, the United States, Finland, the Netherlands and Japan, the skill level of men is higher than in the private sector. Still, Israel’s pattern is similar to most countries surveyed.
Mazar estimated that the among all the countries the return, the financial payback on skills in the private sector was more than double what it is in the public sector.