Fringe Benefits, Self-Selection, and the Public/Private Compensation Differential

Achim Schmillen

Journal of Development Studies, 2022, vol. 58, issue 6, 1140-1159

Abstract: Across developing countries, many workers strive for public sector jobs. Is this because public sector workers receive higher compensation than comparable private sector workers? This study addresses this question looking at broad measures of compensation that encompass wages as well as non-wage fringe benefits such as paid leave and access to social insurances. Using detailed labour force data for Bhutan, it combines Oaxaca type decompositions of compensation differentials into characteristics and coefficients effects with multinomial logit models for self-selection into labour force participation and the public or private sector. The study finds that public/private wage differentials are sizeable but can entirely be accounted for by observable characteristics (in particular by differences in the average educational attainment and industrial structures). A sizeable public/private differential in fringe benefits related to leave can also be accounted for by differences in observable characteristics between public and private sector workers. However, this is not the case for the differential in non-leave-related fringe benefits. Instead, differentials in non-leave-related fringe benefits are largely due to coefficients effects, strongly suggesting that preferences for public sector jobs are at least in part the result of pronounced intersectoral differentials in such benefits.

Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00220388.2021.2017893 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jdevst:v:58:y:2022:i:6:p:1140-1159

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/FJDS20

DOI: 10.1080/00220388.2021.2017893

Access Statistics for this article

Journal of Development Studies is currently edited by Howard White, Oliver Morrissey and Ken Shadlen

More articles in Journal of Development Studies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().