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Private and Government Employment in the OECD: Productivities and Wages

Georgios Karras

Economic Notes, 2000, vol. 29, issue 2, 267-279

Abstract: type="main" xml:lang="en">

This paper estimates the productivity of private and government employment for a panel of 23 OECD economies over the 1961–1992 period, and investigates their relation to the government/private wage ratio. The paper finds that (i) the elasticities of output with respect to private and government employment are statistically significantly different from each other; (ii) the marginal products of private and government employment are not statistically significantly different, which suggests that government employment is neither over- nor under-provided, and that shifting employment from one sector to the other is not likely to produce substantial output gains; and (iii) in most of the countries examined, government workers are overpaid in the sense that the government/private wage ratio exceeds the corresponding ratio of marginal products.

(J.E.L. E24, E62).

Date: 2000
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