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Under economic adjustment programs, do private sector wages respond to changes in public wages and employment?

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  • Adam, Antonis

Abstract

We examine the spillovers from changes in public sector wages and employment on private sector wages. Using a panel VAR model, we show that changes in public sector wages have a greater effect on private sector wages than changes in public sector employment. We motivate our analysis using the Economic Adjustment Program for Greece, and a simple theoretical model. The empirical validity of these effects is verified through a series of robustness tests. These results have important implications on the evaluation of the recent EU Economic Adjustment Programs and the future design of Internal Devaluation strategies.

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  • Adam, Antonis, 2020. "Under economic adjustment programs, do private sector wages respond to changes in public wages and employment?," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1334-1351.
    • Handle: RePEc:eee:jpolmo:v:42:y:2020:i:6:p:1334-1351
    DOI: 10.1016/j.jpolmod.2020.01.009
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    Cited by:

    1. Antonis Adam & Thomas Moutos, 2023. "Do Public Sector Employment Reductions Promote Informality?," CESifo Working Paper Series 10614, CESifo.
    2. Adolfo C. Fernández Puente & Nuria Sánchez-Sánchez, 2023. "The Impact of the Different Dimensions of Job Quality on Job Satisfaction in the Public and Private sector. What is Wrong with the Social Environment?," SAGE Open, , vol. 13(4), pages 21582440231, December.
    3. Cyrille Lenoël & Corrado Macchiarelli & Garry Young, 2023. "Greece 2010–18: What Could Have Been Done Differently?," Open Economies Review, Springer, vol. 34(2), pages 281-315, April.
    4. Konstantinos Spinthiropoulos & Efthymia Tsiatsiou & Alexandros Garefalakis & Georgios Chaitidis & Eirini Stavropoulou, 2021. "Memoranda in Greece and their Impact on Public Employees’ Earnings: Payroll Data from a Greek Public University," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 11(4), pages 104-119.

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    More about this item

    Keywords

    Public sector wages; Public sector employment; Panel VAR; Internal devaluation;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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