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Measuring Rents from Public Employment: Regression discontinuity evidence from Kenya

Nicholas Barton, Tessa Bold and Justin Sandefur ()

No 12105, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Public employees in many developing economies earn much higher wages than similar private-sector workers. These wage premia may reflect an efficient return to effort or unobserved skills, or an inefficient rent causing labor misallocation. To distinguish these explanations, we exploit the Kenyan government's algorithm for hiring eighteen-thousand new teachers in 2010 in a regression discontinuity design. Fuzzy regression discontinuity estimates yield a civil-service wage premium of over 100% (not attributable to observed or unobserved skills), but no effect on motivation, suggesting rent-sharing as the most plausible explanation for the wage premium.

Keywords: civil servants; motivation; public sector wages; wage gap (search for similar items in EconPapers)
JEL-codes: H1 J3 O1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma
Date: 2017-06
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