Public employment redux

Pietro Garibaldi, Pedro Gomes and Thepthida Sopraseuth

Journal of Government and Economics, 2021, vol. 1, issue C

Abstract: The public sector hires disproportionately more educated workers. To rationalize this finding, we propose a model with a perfectly competitive private sector, and non-Walrasian public sector. Our economy also features heterogeneity across individuals and jobs, and a simple sorting mechanism that generates underemployment - educated workers performing unskilled jobs. We find that the public-sector wage differential and excess underemployment account for 15 percent of the education bias, with the remaining accounted for by technology. In a counterintuitive fashion, we find that more compressed wages in the public sector raise inequality in the private sector.

Keywords: Public-sector employment; Public-sector wages; Underemployment; Education (search for similar items in EconPapers)
JEL-codes: E24 E62 J20 J24 J31 J45 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (5)

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http://www.sciencedirect.com/science/article/pii/S2667319321000033
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Related works:
Working Paper: Public Employment Redux (2020)
Working Paper: Public Employment Redux (2019)
Working Paper: Public Employment Redux (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jogoec:v:1:y:2021:i:c:s2667319321000033

DOI: 10.1016/j.jge.2021.100003

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