A study examined the patterns of employment in the public sector as compared to the private, possible changes in that pattern in the last decade, and implications for educational policy. By using the human capital concept (employment patterns depend on productivity differences in individuals) and labor market segmentation analysis, the following items were researched: (1) differences in average education of public and private sector employees of different race and sex in three job levels; (2) differential wage and employment discrimination in both sectors and within the public sector; (3) salary and mobility equalization effect of educational differences between blacks and whites and women and men in the two sectors at different job levels. It was found that public employees have higher average schooling. Salary differences still exist between blacks and women and white males, all personal characteristics being equal (experience, education, etc.). Educational equalization will not have much effect on earnings equalization in similar jobs for blacks and women. It was concluded that possibilities of upward mobility for more educated blacks and women depend on continued expansion of public employment and educational services. Additionally, public employment expansion implies an increase in demand for high level education by all groups, especially blacks and women. (FP)