Alfredo M. Pereira () (Department of Economics, College of William and Mary) Rui Manuel Pereira () (Faculdade de Ciencias e Tecnologia, Universidade Nova de Lisboa)
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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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Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number
36.
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