Beaches, Sunshine, and Public Sector Pay: Theory and Evidence on Amenities and Rent Extraction by Government Workers

Jan Brueckner and David Neumark

American Economic Journal: Economic Policy, 2014, vol. 6, issue 2, 198-230

Abstract: Rent extraction by public sector workers may be limited by the ability of taxpayers to vote with their feet. But rent extraction may be higher in regions where high amenities mute the migration response. This paper develops a theoretical model that predicts such a link between public sector wage differentials and local amenities, and the predictions are tested by analyzing variation in these differentials and amenities across states. Public sector wage differentials are, in fact, larger in the presence of high amenities, with the effect stronger for unionized public sector workers, whose political power may allow greater scope for rent extraction.

JEL-codes: H75 H76 J31 J32 J45 J51 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/pol.6.2.198
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Citations: View citations in EconPapers (33)

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Related works:
Working Paper: Beaches, sunshine, and public-sector pay: theory and evidence on amenities and rent extraction by government workers (2011)
Working Paper: Beaches, Sunshine, and Public-Sector Pay: Theory and Evidence on Amenities and Rent Extraction by Government Workers (2011)
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