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Performance and Equality in Public Sector Wages

Abstract The present paper describes how democratic values—reflected by work equality values—paired with the organizational performance characteristics—defined by the height of organizational inputs and outputs—affect gender differences in wages. It is suggested here that despite the democratic conception of the public sector's equal employment opportunities, variations in the organizational performance of 83 local authorities account for gender differences in wages. The study assumes that organizational inputs (type and level of resources) and outputs (type and level of provided services) generate gender differences in individual earnings, when controlling for human capital factors. The results show that variations in organizational performance affect women's but not men's wages. However, the effect of individual level (demographic, human capital and employment) characteristics, reflecting the meritocracy‐based and democratic nature of public sector employment rather than the level of organizational performance explains most of the variance in gender differences in wages. These results point to the slow shift from the principle of administrative values of democracy and equality to the adoption of performance‐related mechanisms in the determination of public sector wages.