Are Public Sector Workers Underpaid? Appropriate Comparators in a Developing Country

Bales, Sarah ; Rama, Martin

World Bank, Washington, DC

关键词: WORKERS' COMPENSATION;    PUBLIC SECTOR WAGES;    COMPARATIVE ECONOMICS;    DEVELOPING COUNTRIES;    LABOR MARKETS;   

DOI  :  10.1596/1813-9450-2747
RP-ID  :  WPS2747

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

How is public sector compensation bestaligned with the market? In industrial countries a commonreference is the salary paid by private employers forsimilar jobs (the "jobs approach"). But comparablejobs are formal, and in developing countries the relevantalternative for many public sector workers is informalsector employment. Another approach uses as a reference, theearnings of similar workers in the private sector,regardless of whether their jobs are formal, or informal(the "workers approach"). A potential shortcomingof this approach is that workers may differ incharacteristics that are unobservable. The authors assessthe importance of this shortcoming, by relying on fiveeconometric methods, four of which correct the bias fromunobservable characteristics. The authors focus onstate-owned enterprises in Vietnam, which recruited workerson the basis of political loyalty, and other unobservablecharacteristics. A massive downsizing program, which led tothe departure of the most entrepreneurial workers, may haveexacerbated the selection bias. However, all the resultsobtained with the workers approach, fall within a relativelynarrow range. They suggest that workers in state-ownedenterprises, are overpaid by twenty percent, or more. Incontrast, the jobs approach indicates that they could earntwo, to six times more in the private sector.