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Controlling the Public Wage Bill in Portugal: The Case of University Professors

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  • Alfredo M. Pereira

    ()
    (Department of Economics, College of William and Mary)

  • Rui Manuel Pereira

    ()
    (Faculdade de Ciencias e Tecnologia, Universidade Nova de Lisboa)

Abstract

Public wages are a large share of the public budget in Portugal and, therefore, hiring freezes are a central feature of the efforts to control the public deficit. The system of public career advancement, however, may lead to increases in the wage bill even in the presence of hiring freezes. We estimate this wage drift effect in the case of university professors. We use a logit analysis with 1999 census data to identify the determinants of career advancement, to estimate the employment distribution in previous years, and to obtain the corresponding wage bill. We estimate that the annual wage drift is 2.6%, a figure well above the GDP growth rate and, therefore, we conclude that hiring freezes may be far from enough to stop the expansion of the public wage bill.

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Bibliographic Info

Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number 36.

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Length: 7 pages
Date of creation: 25 Jul 2006
Date of revision: 11 Aug 2006
Handle: RePEc:cwm:wpaper:36

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Keywords: public wages; budgetary restraint.;

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  1. McCue, Kristin, 1996. "Promotions and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 175-209, April.
  2. Robert Gibbons & Michael Waldman, 1999. "A Theory Of Wage And Promotion Dynamics Inside Firms," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1321-1358, November.
  3. Robert Gibbons, 1996. "Incentives and Careers in Organizations," NBER Working Papers 5705, National Bureau of Economic Research, Inc.
  4. Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 881-919, November.
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