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Wages in the Federal and Private Sectors

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  • Steven F. Venti
Abstract
This study addresses the legal principle of "comparability" that ties federal sector wages to wages in the private sector. We first examine comparability by determining if workers with similar observed and unobserved characteristics receive the same wages in each sector. Estimates based on data from the 1982 CPS indicate males may have a slight wage advantage in the federal sector. Female workers earn substantially more in the federal sector than inthe private sector. We then develop a choice-theoretic approach to the issue of comparability by applying a simple supply argument: a cost-minimizing federal employer would pay wages no higher than necessary to attract employees and eliminate queues for federal jobs. If the market pays equalizing differences for unique attributes of each sector, then this approach is not consistent with wage equality between the sectors. A model jointly determining sectoral attachment and wage offers is estimated by maximum likelihood. Results suggest the elimination of queues will require substantial wage reductions for both male and female federal employees.

Suggested Citation

  • Steven F. Venti, 1985. "Wages in the Federal and Private Sectors," NBER Working Papers 1641, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1641
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    Cited by:

    1. Denis Fougère & Julien Pouget, 2003. "Les déterminants économiques de l'entrée dans la fonction publique," Économie et Statistique, Programme National Persée, vol. 369(1), pages 15-48.
    2. Moundir, Lassassi & Menna, Khaled, 2016. "La Notion De « Femmes Au Foyer » En Algerie, Une Realite Ou Une Representation Nostalgique [The Notion Of “ Homemaker” In Algeria, A Reality Or A Nostalgic Representation]," MPRA Paper 85740, University Library of Munich, Germany.
    3. Christofides, Louis N. & Pashardes, Panos, 2002. "Self/paid-employment, public/private sector selection, and wage differentials," Labour Economics, Elsevier, vol. 9(6), pages 737-762, December.
    4. Fábio Veras Soares, 2004. "Do Informal Workers Queue For Formal Jobs in Brazil ?," Discussion Papers 1021, Instituto de Pesquisa Econômica Aplicada - IPEA.
    5. Rebecca M. Blank, 1993. "Public Sector Growth and Labor Market Flexibility: The United States vs. The United Kingdom," NBER Working Papers 4339, National Bureau of Economic Research, Inc.
    6. Alan B. Krueger, 1988. "Are Public Sector Workers Paid More Than Their Alternative Wage? Evidence from Longitudinal Data and Job Queues," NBER Chapters, in: When Public Sector Workers Unionize, pages 217-242, National Bureau of Economic Research, Inc.
    7. repec:eee:labchp:v:3:y:1999:i:pc:p:3573-3630 is not listed on IDEAS
    8. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630, Elsevier.
    9. Aslam, Monazza & Kingdon, Geeta, 2009. "Public-private sector segmentation in the Pakistani labour market," Journal of Asian Economics, Elsevier, vol. 20(1), pages 34-49, January.
    10. Robert A. Margo & T. Aldrich Finegan, 1995. "Changes in the Distribution of Wages, 1940-1950: The Public vs. the Private Sector," NBER Working Papers 5389, National Bureau of Economic Research, Inc.
    11. Alejandra Mizala & Pilar Romaguera & Sebastian Gallegos, 2010. "Public-Private Wage Gap In Latin America (1999-2007): A Matching Approach," Documentos de Trabajo 268, Centro de Economía Aplicada, Universidad de Chile.
    12. Laura Pagani, 2003. "Why Do People from Southern Italy Seek Jobs in the Public Sector?," LABOUR, CEIS, vol. 17(1), pages 63-91, March.
    13. Bahman Bahrami & John Bitzan & Jay Leitch, 2009. "Union Worker Wage Effect in the Public Sector," Journal of Labor Research, Springer, vol. 30(1), pages 35-51, March.
    14. Keith A. Bender, 1998. "The Central Government‐Private Sector Wage Differential," Journal of Economic Surveys, Wiley Blackwell, vol. 12(2), pages 177-220, April.
    15. Rebecca M. Blank, 1994. "Public Sector Growth and Labor Market Flexibility: The United States versus the United Kingdom," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 223-264, National Bureau of Economic Research, Inc.
    16. Pedro Gomes, 2009. "Labour market effects of public sector employment and wages," 2009 Meeting Papers 313, Society for Economic Dynamics.

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