Are Public Sector Workers in Developing Countries Overpaid? Evidence from a New Global Data Set
This paper examines the public sector wage premium using nationally representative household surveys from 91 countries. The public sector generally pays a wage premium compared to all private sector salaried employees, but the size of the premium...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/398361551117216050/Are-Public-Sector-Workers-in-Developing-Countries-Overpaid-Evidence-from-a-New-Global-Data-Set http://hdl.handle.net/10986/31328 |
| Summary: | This paper examines the public sector
wage premium using nationally representative household
surveys from 91 countries. The public sector generally pays
a wage premium compared to all private sector salaried
employees, but the size of the premium is sensitive to the
choice of the private sector comparator and varies
considerably by worker characteristics. For most countries,
the average premium disappears when the public sector is
compared to only formal sector private employees, especially
when controlling for occupation. The public sector wage
premium is higher for women and low-skilled workers. In
contrast, high-skilled public sector employees are most
often paid the same as their private sector counterparts or
may even pay a penalty for working in the public sector.
Consistent with this, the public sector premium is greater
for employees with less education, those working in lower
paid occupations, and those whose earnings fall in the lower
part of the conditional earnings distribution. Across
countries, the wage premium is only weakly associated with
countries’ level of development. These findings nuance the
existing consensus that public sector workers tend to enjoy
a significant wage premium over their private sector
counterparts, and that this premium is especially large in
low-income countries. |
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