The study investigates the factors that influence the wage earnings in the public and private sectors in Uganda in the economic reform period, using the household survey data for 1992-93, 1999-2000 and 2002-03. The results suggest that wage earnings are positively and significantly influenced by the level of education, age, geographical location, and the economic sector of employment. This study uses the Mincerian-type wage model to calculate the share of individual endowments and their impact along with the selection effect in explaining the wage differentials between the public and private sectors. The findings of this study suggest that the differences in educational attainment in the reform period have played a very important role in widening the public sector – private sector wage gap. The results are consistent with empirical literature obtained from other developing countries.

Uganda has been implementing International Monetary Fund (IMF)/World Bank sponsored economic reforms from the mid-1980s, till date, which include liberalization of agricultural output marketing (Deininger and Okidi, 2003), financial sector liberalization (Nannyonjo, 2002), privatization of state enterprises (Ruhweza, 2003), decentralization (Makokha, 2001), and civil service sector reforms. The economic reforms are adopted so as to eliminate the distortions in the factor and product markets in order to enhance the market mechanisms in the mobilization and allocation of resources.
One expected outcome of economic reforms would be the market-determined real wages that would provide incentives to private investors, thereby raising the likelihood of creating employment opportunities for both skilled and unskilled workers (Dercon et al., 2005; Teal, 2000).

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