Wage Differentials and State-Private Sector Employment Choice in the Federal Republic of Yugoslavia

Wage Differentials and State-Private Sector Employment Choice in the Federal Republic of Yugoslavia

The authors use the newly available Yugoslavian Labor Force Survey data to investigate wage differentials and employment decisions in the state and private sectors in Yugoslavia. For the analysis the authors use three empirical models that rely on different statistical assumptions. They extend the standard switching regression model to allow non-normality in the joint distribution of the error terms. After correcting for the sector selection bias and controlling for workers' characteristics the authors find a private sector wage advantage. The wage premium is largest for workers with low education levels and declining for workers with higher educational levels. Given the regulatory and tax policies that pushed the private sector into the informal sphere of the economy during the period covered by our data, the authors argue that the state-private wage gap is likely to grow in the future. This will make it increasingly difficult for the state sector to attract and retain highly skilled employees.

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Bibliographic Details
Main Authors: Lokshin, Michael M., Jovanovic, Branko
Format: Policy Research Working Paper biblioteca
Language:English
en_US
Published: World Bank, Washington, DC 2003-01
Subjects:WAGE DIFFERENTIATION, EDUCATIONAL LEVEL, REGULATORY FRAMEWORK, TAX POLICY, PRIVATE SECTOR, SKILLED WORKERS, CIVIL SERVICE AGRICULTURE, BOOK VALUE, CENTRALLY PLANNED ECONOMIES, DEVELOPMENT ECONOMICS, DISTRIBUTION OF INCOME, DISTRICTS, ECONOMIC CONDITIONS, ECONOMIC SECTORS, ECONOMIC STRUCTURE, ECONOMICS RESEARCH, EMPLOYMENT, EQUALIZATION, EQUATIONS, EXOGENOUS VARIABLES, FEDERAL GOVERNMENT, FORMAL ANALYSIS, GDP, GENDER, HUMAN CAPITAL, INCOME DISTRIBUTION, INFLATION, INFORMAL ECONOMY, INNOVATION, ISOLATION, LABOR MARKET, LAWS, LEGISLATIVE MEASURES, PENSIONS, PRIVATE OWNERSHIP, PRIVATE SECTOR PARTICIPATION, PRIVATIZATION, PRIVATIZATION AGENCY, PRIVATIZATION PROCEEDS, PRODUCTIVITY, PUBLIC SECTOR, REPUBLICS, RETIREMENT, SICK LEAVE, SOCIAL CAPITAL, SOCIAL SECURITY, SOFT BUDGET CONSTRAINTS, STATE CONTROL, STATE SECTOR, TAXATION, TRANSITION ECONOMIES, TRANSPORT, UNEMPLOYMENT, UNEMPLOYMENT RATE, VALUATION, WAGE DIFFERENTIALS, WAGE RATES, WAGES, WORKERS, WORKING CAPITAL, WORKING CONDITIONS,
Online Access:http://documents.worldbank.org/curated/en/2003/01/2128866/wage-differentials-state-private-sector-employment-choice-federal-republic-yugoslavia
http://hdl.handle.net/10986/19173
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Summary:The authors use the newly available Yugoslavian Labor Force Survey data to investigate wage differentials and employment decisions in the state and private sectors in Yugoslavia. For the analysis the authors use three empirical models that rely on different statistical assumptions. They extend the standard switching regression model to allow non-normality in the joint distribution of the error terms. After correcting for the sector selection bias and controlling for workers' characteristics the authors find a private sector wage advantage. The wage premium is largest for workers with low education levels and declining for workers with higher educational levels. Given the regulatory and tax policies that pushed the private sector into the informal sphere of the economy during the period covered by our data, the authors argue that the state-private wage gap is likely to grow in the future. This will make it increasingly difficult for the state sector to attract and retain highly skilled employees.

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