Wage differentials and state-private sector employment choice in the Federal Republic of Yugoslavia

Michael Lokshin and Branko Jovanovic

No 2959, Policy Research Working Paper Series from The World Bank

Abstract: The authors use the newly available Yugoslavian Labor Force Survey data to investigate wage differentials and employment decisions in the state and private sectors in Yugoslavia. For the analysis the authors use three empirical models that rely on different statistical assumptions. They extend the standard switching regression model to allow non-normality in the joint distribution of the error terms. After correcting for the sector selection bias and controlling for workers'characteristics the authors find a private sector wage advantage. The wage premium is largest for workers with low education levels and declining for workers with higher educational levels. Given the regulatory and tax policies that pushed the private sector into the informal sphere of the economy during the period covered by our data, the authors argue that the state-private wage gap is likely to grow in the future. This will make it increasingly difficult for the state sector to attract and retain highly skilled employees.

Keywords: Health Monitoring&Evaluation; Decentralization; Agricultural Knowledge&Information Systems; Public Health Promotion; Economic Theory&Research; Health Monitoring&Evaluation; Economic Theory&Research; Agricultural Knowledge&Information Systems; National Governance; Banks&Banking Reform (search for similar items in EconPapers)
Date: 2003-01-31
New Economics Papers: this item is included in nep-tra
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Citations: View citations in EconPapers (21)

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