Meritocracy, Public-Sector Pay and Human Capital Accumulation

Andri Chassamboulli and Pedro Gomes

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: We set up a model with search and matching frictions to understand the effects of employment and wage policies, as well as non-meritocratic hiring in the public sector, on unemployment, rent seeking and education decisions. Wages and employment of skilled and unskilled public-sector workers affect educational attainment; the extent of that effect depends on the structure of the labor market and how non-meritocratic public-sector hiring is. Conditional on inefficiently high public-sector wages, less-meritocratic hiring in the public sector lowers the unemployment rate and might raise welfare because it limits the size of queues for public-sector jobs. Public-sector wage and employment policies impose an endogenous constraint on the number of workers the government can hire through connections.

Keywords: Public-sector employment; meritocracy; public-sector wages; unemployment; skilled workers; human capital accumulation (search for similar items in EconPapers)
JEL-codes: E24 J31 J45 J64 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2018-07
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:08-2018

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