Are State Workers Overpaid? Survey Evidence from Liquor Privatization in Washington State
Journal of Labor Research, 2015, vol. 36, issue 4, 347-388
Industry privatizations that result in exogenous job displacement of public employees can be exploited to estimate public sector wage rents. I report the findings of an original survey I administered to examine how wages of displaced government workers were affected by a 2012 privatization of liquor retailing in Washington State. Based on a panel difference-in-differences estimator I find that privatization reduced wages by $2.51 per hour or 17 percent compared to a counterfactual group of nearly identical non-displaced workers, with larger effects for women. I decompose wage losses into three rents identified in the literature: public sector rents, union premiums, and industry-specific human capital. Public sector wage premiums separately account for 85 to 90 percent of overall wage losses, while union premiums and industry-specific human capital account for just 10 to 15 percent. The results are consistent with a roughly 16 percent public sector wage premium. Copyright Springer Science+Business Media New York 2015
Keywords: Public-sector labor markets; Union rents; Displaced workers; Privatization; J45; J51; L33; J63; J68 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:jlabre:v:36:y:2015:i:4:p:347-388
Ordering information: This journal article can be ordered from
Access Statistics for this article
Journal of Labor Research is currently edited by Ozkan Eren
More articles in Journal of Labor Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().