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Public-Private Wage Gap In Latin America (1999-2007): A Matching Approach

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  • Alejandra Mizala
  • Pilar Romaguera
  • Sebastian Gallegos

    ()

Abstract

Using matching methods, we estimate the public-private wage gap in seven Latin American countries—Argentina, Bolivia, Brazil, Chile, Costa Rica, Paraguay and Uruguay—for the years 1999 and 2007. These methods do not require any estimation of earnings equations and hence no validity-out-of-the-support assumptions; furthermore, this approach allows us to estimate not only the average wage gap but also its distribution. Our main findings indicate that the average public sector worker earns more than his/her private counterpart. This differential has increased over the 1999-2007 period. Our results also show that there are important differences along the wage distribution. In particular, we find that the public sector wage premium declines as it moves up the conditional wage distribution, becoming a public sector wage penalty for the higher percentiles. Over the 1999-2007 period, the public-private wage gap changes from positive to negative at higher percentiles of the distribution, but still the most qualified public sector workers do face a wage penalty. Therefore, the profitability of public sector employment seems to be at its greatest at the lower end of the wage distribution. JEL Classification: J31, D31. Key words: Public-private Wage Gap, Matching, Public Sector, Latin America.

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Bibliographic Info

Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 268.

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Date of creation: 2010
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Handle: RePEc:edj:ceauch:268

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Cited by:
  1. Antonio Romero-Medina & Matteo Triossi, 2013. "Games with capacity manipulation: incentives and Nash equilibria," Social Choice and Welfare, Springer, vol. 41(3), pages 701-720, September.
  2. Juan F. Escobar & Juuso Toikka, 2013. "Efficiency in Games With Markovian Private Information," Econometrica, Econometric Society, vol. 81(5), pages 1887-1934, 09.
  3. Antonio Romero-Medina & Matteo Triossi, 2011. "Acyclicity and singleton cores in matching markets," Economics Working Papers we1126, Universidad Carlos III, Departamento de Economía.
  4. Antonio Romero Medina & Mateo Triossi, 2007. "Games of capacities : a (close) look to Nash Equilibria," Economics Working Papers we075933, Universidad Carlos III, Departamento de Economía.
  5. Sofia Bauducco & Alexandre Janiak, 2012. "Minimum wages strike back: the effects on capital and labor demands in a large-firm framework," Documentos de Trabajo 287, Centro de Economía Aplicada, Universidad de Chile.
  6. Felipe Balmaceda & Juan F. Escobar, 2012. "Self Governance in Social Networks of Information Transmission," Documentos de Trabajo 290, Centro de Economía Aplicada, Universidad de Chile.
  7. F. Balmaceda & S.R. Balseiro & J.R. Correa & N.E. Stier-Moses, 2010. "Cost of Moral Hazard and Limited Liability in the Principal-Agent Problem," Documentos de Trabajo 275, Centro de Economía Aplicada, Universidad de Chile.
  8. Evangelina Dardati & Julio Riutort, 2011. "Investment and Environmental Regulation: Evidence on the Role of Cash Flow," Documentos de Trabajo 283, Centro de Economía Aplicada, Universidad de Chile.
  9. Antonio Romero-Medina & Matteo Triossi, 2010. "Non-revelation mechanisms in many-to-one markets," Economics Working Papers we1018, Universidad Carlos III, Departamento de Economía.
  10. Alexandre Janiak & Paulo Santos Monteiro, 2010. "Labor force heterogeneity: implications for the relation between aggregate volatility and government size," Documentos de Trabajo 272, Centro de Economía Aplicada, Universidad de Chile.

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