The Role of Public Employment and Wage Policy in the Dynamic of Earnings Inequality: The Tunisian Perspective

Mohamed Marouani () and Minh Le ()
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Mohamed Marouani: IRD - Universite Paris 1 Pantheon-Sorbonne
Minh Le: Universite Paris 1 Pantheon-Sorbonne

No 1683, Working Papers from Economic Research Forum

Abstract: The public sector plays a large role in many developing economies, but its effect on earnings inequality dynamics has not been widely studied. In this paper, we investigate the earnings inequality trends and their determinants in the decades before and after the Tunisian Revolution, focusing on the impact of public wage and employment policy changes. A recentered-influence function (RIF) decomposition is performed to decompose the change in earnings into wage structure and composition effects and to assess the contribution of various determinants of inequality change. We find that earnings inequality decreased significantly during the period of investigation in Tunisia, mainly due to the decrease in the public–private wage gap and in sector wage gaps on the demand side, and the decreasing education premia on the supply side. The increase in marginal returns to average routine-task intensity jobs, the falling return to experience, and the decreasing regional wage gap also contributed to declining earnings inequality, but to a lesser extent.

Pages: 40
Date: 2023-12-20, Revised 2023-12-20
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Published by The Economic Research Forum (ERF)

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