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Controlling the Public Wage Bill in Portugal: The Case of University Professors

Alfredo Pereira and Rui Pereira

No 36, Working Papers from Department of Economics, College of William and Mary

Abstract: Public wages are a large share of the public budget in Portugal and, therefore, hiring freezes are a central feature of the efforts to control the public deficit. The system of public career advancement, however, may lead to increases in the wage bill even in the presence of hiring freezes. We estimate this wage drift effect in the case of university professors. We use a logit analysis with 1999 census data to identify the determinants of career advancement, to estimate the employment distribution in previous years, and to obtain the corresponding wage bill. We estimate that the annual wage drift is 2.6%, a figure well above the GDP growth rate and, therefore, we conclude that hiring freezes may be far from enough to stop the expansion of the public wage bill.

Keywords: public wages; budgetary restraint. (search for similar items in EconPapers)
JEL-codes: H60 J30 J45 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2006-07-25, Revised 2006-08-11
New Economics Papers: this item is included in nep-lab, nep-pbe and nep-sog
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