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Cross-Country Evidence on Public Sector Retrenchment

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Author Info

  • Haltiwanger, John
  • Singh, Manisha

Abstract

This article reports the results from a survey of public sector employment retrenchment episodes across a wide variety of developing and transition economies. The information collected and analyzed is primarily from internal World Bank documents and in-depth interviews with World Bank staff having operational information about experiences in specific countries. Using the information collected on 41 retrenchment programs across 37 countries, the article analyzes the relationships between the factors leading to retrenchment, the scope and nature of retrenchment, and the methods used to accomplish the retrenchment. The discussion of methods includes an analysis of the mix of involuntary and voluntary employment reduction programs, the compensation schemes offered, and the extent of targeting of specific types of workers. Although relevant quantitative information is limited, the article also attempts to evaluate the outcome of the programs on several dimensions. The most striking findings relate to analysis of the factors leading a significant fraction of programs to rehire workers separated from the public sector (thereby defeating the programs' objective). In addition, the article relates program characteristics to calculated summary financial payback indicators and to the nature of the labor market adjustment. Copyright 1999 by Oxford University Press.

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Bibliographic Info

Article provided by World Bank Group in its journal World Bank Economic Review.

Volume (Year): 13 (1999)
Issue (Month): 1 (January)
Pages: 23-66

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Handle: RePEc:oup:wbecrv:v:13:y:1999:i:1:p:23-66

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Cited by:
  1. Rama, Martin & Newman, Constance, 2002. "Downsizing and productivity gains in the public and private sectors of Colombia," Policy Research Working Paper Series 2770, The World Bank.
  2. World Bank, 2007. "Guinea-Bissau - Public Expenditure Review Update : Enhancing Growth and Fiscal Adjustment Through Civil Service Reform," World Bank Other Operational Studies 7736, The World Bank.
  3. Atolia, Manoj, 2007. "Trade liberalization and rising wage inequality in Latin America: Reconciliation with HOS theory," Journal of International Economics, Elsevier, vol. 71(2), pages 467-494, April.
  4. Alvaro Forteza & Martín Rama, 2000. "Labor Market "Rigidity" and the Success of Economic Reforms Across more than One Hundred Countries," Documentos de Trabajo (working papers) 0600, Department of Economics - dECON.
  5. World Bank, 2002. "Pacific Islands - Regional Economic Report : Embarking on a Global Voyage - Trade Liberalization and Complementary Reforms in the Pacific," World Bank Other Operational Studies 15362, The World Bank.
  6. Bales, Sarah & Rama, Martin, 2001. "Are public sector workers underpaid? - Appropriate comparators in a developing country," Policy Research Working Paper Series 2747, The World Bank.
  7. Dong, Xiao-yuan & Xu, Lixin Colin, 2009. "Labor restructuring in China: Toward a functioning labor market," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 287-305, June.
  8. Alberto Chong & Florencio Lopez-de-Silanes, 2003. "Privatization and Labor Force Restructuring Around the World," Research Department Publications 4329, Inter-American Development Bank, Research Department.
  9. Matusz, Steven J. & Tarr, David, 1999. "Adjusting to trade policy reform," Policy Research Working Paper Series 2142, The World Bank.
  10. Buffie, Edward F., 2009. "Public sector layoffs, severance pay, and inflation in the small open economy," Journal of International Money and Finance, Elsevier, vol. 28(6), pages 987-1005, October.
  11. MacIsaac, Donna & Rama, Martin, 2001. "Mandatory severance pay : its coverage and effects in Peru," Policy Research Working Paper Series 2626, The World Bank.
  12. Khan, Iram, 2006. "Public vs. private sector : an examination of neo-liberal ideology," MPRA Paper 13443, University Library of Munich, Germany.
  13. Alvaro Forteza & Martin Rama, 2006. "Labor Market 'Rigidity' and the Success of Economic Reforms Across More Than 100 Countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(1), pages 75-105.
  14. Alberto Chong & Florencio Lopez-de-Silanes, 2003. "La privatización y la reestructuración de la fuerza laboral en todo el mundo," Research Department Publications 4330, Inter-American Development Bank, Research Department.
  15. Virgilio Galdo & Alberto Chong, 2006. "Sobre la participación extranjera y los patrones de contratación después de la privatización," Research Department Publications 4442, Inter-American Development Bank, Research Department.
  16. Manoj Atolia, 2003. "Productivity-Enhancing Reforms, Private Capital Inflows, and Real Interest Rates in Africa," Working Papers wp2003_10_02, Department of Economics, Florida State University, revised Dec 2008.
  17. Taliercio, Robert Jr., 2004. "Administrative Reform as Credible Commitment: The Impact of Autonomy on Revenue Authority Performance in Latin America," World Development, Elsevier, vol. 32(2), pages 213-232, February.
  18. Virgilio Galdo & Alberto Chong, 2006. "On Foreign Participation and Hiring Patterns After Privatization," Research Department Publications 4441, Inter-American Development Bank, Research Department.
  19. Djavad Salehi-Isfahani & Russell D. Murphy, 2006. "Labor market flexibility and investment in human capital," Working Papers e06-5, Virginia Polytechnic Institute and State University, Department of Economics.
  20. Rama,Martin G., 1997. "Efficient public sector downsizing," Policy Research Working Paper Series 1840, The World Bank.
  21. Martin Rama, 2002. "Mondialisation, inégalités et politiques de l'emploi," Revue d’économie du développement, De Boeck Université, vol. 16(1), pages 43-83.

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