Are Public Sector Workers Underpaid? Appropriate Comparators in a Developing Country
How is public sector compensation best
aligned with the market? In industrial countries a common
reference is the salary paid by private employers for
similar jobs (the "jobs approach"). But comparable
jobs are formal, and in developing countries the relevant
alternative for many public sector workers is informal
sector employment. Another approach uses as a reference, the
earnings of similar workers in the private sector,
regardless of whether their jobs are formal, or informal
(the "workers approach"). A potential shortcoming
of this approach is that workers may differ in
characteristics that are unobservable. The authors assess
the importance of this shortcoming, by relying on five
econometric methods, four of which correct the bias from
unobservable characteristics. The authors focus on
state-owned enterprises in Vietnam, which recruited workers
on the basis of political loyalty, and other unobservable
characteristics. A massive downsizing program, which led to
the departure of the most entrepreneurial workers, may have
exacerbated the selection bias. However, all the results
obtained with the workers approach, fall within a relatively
narrow range. They suggest that workers in state-owned
enterprises, are overpaid by twenty percent, or more. In
contrast, the jobs approach indicates that they could earn
two, to six times more in the private sector.
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Bibliographic Details
| Main Authors: |
Bales, Sarah,
Rama, Martin |
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| Language: | English
en_US |
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| Published: |
World Bank, Washington, DC
2001-12
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| Subjects: | WORKERS' COMPENSATION,
PUBLIC SECTOR WAGES,
COMPARATIVE ECONOMICS,
DEVELOPING COUNTRIES,
LABOR MARKETS,
PUBLIC SECTOR MANAGEMENT,
EMPLOYMENT & INCOME,
FORMAL SECTOR,
INFORMAL SECTOR,
ECONOMETRIC MODELS,
STATE-OWNED ENTERPRISES,
POLITICAL BIAS,
DOWNSIZING OF ORGANIZATIONS COMMUNITY CHARACTERISTICS,
DATA ANALYSIS,
DATA SETS,
DEPENDENT VARIABLE,
DEVELOPING COUNTRY,
DISTRIBUTION FUNCTIONS,
ECONOMETRIC ANALYSIS,
ECONOMETRIC ISSUES,
ECONOMETRIC MODEL,
EDUCATIONAL ATTAINMENT,
EFFICIENT PUBLIC SECTOR DOWNSIZING,
EMPIRICAL ANALYSIS,
EMPLOYMENT,
EMPLOYMENT STATUS,
EXPENDITURES,
EXPLANATORY VARIABLES,
FAMILIES,
FOREIGN COMPANIES,
GEOGRAPHICAL AREA,
HEALTH PROGRAMS,
HOUSEHOLD CHARACTERISTICS,
HOUSEHOLD CONSUMPTION,
HOUSEHOLD DATA,
HOUSEHOLD QUESTIONNAIRE,
HOUSEHOLD SURVEY,
HUMAN DEVELOPMENT,
INCOME,
INCOME TRANSFER,
INCOMES,
INFORMAL ACTIVITIES,
INFORMAL SECTOR EMPLOYMENT,
INTERNATIONAL STANDARDS,
JOB SEPARATION,
LABOR FORCE,
LABOR FORCE PARTICIPATION,
LABOR MARKET,
LABOR MARKET REGULATIONS,
LABOR PRODUCTIVITY,
LIVING STANDARDS,
LIVING STANDARDS MEASUREMENT,
LOCAL LEVEL,
MARKET ECONOMY,
MODEL ESTIMATION,
MOTIVATION,
NORMAL DISTRIBUTION,
NUTRITION,
POLICY MAKERS,
POLICY MEASURES,
POLICY RESEARCH,
POSITIVE VALUE,
PRIVATE SECTOR,
PRIVATE SECTOR EARNINGS,
PRIVATE SECTOR WORKERS,
PRIVATE SECTORS,
PUBLIC SECTOR,
PUBLIC SECTOR COMPENSATION,
PUBLIC SECTOR REFORM,
PUBLIC SERVICES,
RANDOM EFFECTS,
REFORM PROGRAM,
REFORM PROGRAMS,
REGIONAL DUMMIES,
REGIONAL LEVEL,
REPRESENTATIVE SURVEY,
RETIREMENT,
RURAL AREAS,
SAMPLE SELECTION,
SECTOR EMPLOYMENT,
SELECTION BIAS,
SKILLED WORKER,
SOCIAL PROTECTION,
STATISTICAL OFFICE,
TRANSITION COUNTRIES,
UNIVERSITY GRADUATES,
URBAN AREAS,
VOCATIONAL TRAINING,
WATER SUPPLY,
WORKERS,
YOUNG WORKERS, |
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| Online Access: | http://documents.worldbank.org/curated/en/2001/12/1662737/public-sector-workers-underpaid-appropriate-comparators-developing-country
https://hdl.handle.net/10986/19338
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