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Are Public Sector Workers Paid More Than Their Alternative Wage? Evidence From Longitudinal Data and Job Queues

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Alan B. Krueger

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Abstract

This paper performs a longitudinal comparison of public and private sector pay. Although not decisive because of small sample sizes, the results tend to corroborate the conclusions of previous cross-sectional studies. Specifically, I find that on average wages of federal workers exceed those of private sector workers by 10% to 25%, while wages of state and local government workers are roughly equivalent to or slightly less than the wages of private sector workers. Furthermore, these conclusions hold for a sample of workers who joined the government after being involuntarily displaced from their private sector jobs. In addition, a comparative analysis of the length of job queues suggests that on average more workers apply for job openings in the federal government than in the private sector. Finally, both longitudinal and cross-sectional analyses support the conclusion that the union wage gap is substantially smaller in the public sector than in the private sector.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2500.

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Date of creation: Feb 1988
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Handle: RePEc:nbr:nberwo:2500

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Casey Ichniowski, 1980. "Economic effects of the firefighters' union," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 33(2), pages 198-211, January.
  2. Borjas, George J, 1980. "Wage Determination in the Federal Government: The Role of Constituents and Bureaucrats," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1110-47, December. [Downloadable!] (restricted)
  3. Richard B. Freeman, 1985. "How do Public Sector Wages and Employment Respond to Economic Conditions," NBER Working Papers 1653, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Working Papers 1906, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Brown, Charles, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 113-34, February. [Downloadable!] (restricted)
  6. Steven F. Venti, 1985. "Wages in the Federal and Private Sectors," NBER Working Papers 1641, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Walter Fogel & David Lewin, 1974. "Wage determination in the public sector," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 27(3), pages 410-431, April.
  8. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Sharon P. Smith, 1976. "Pay differential between federal government and private sector workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 29(2), pages 179-197, January.
  10. Martin Asher & Joel Popkin, 1984. "The effect of gender and race differentials on public-private wage comparisons: A study of postal workers," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 38(1), pages 16-25, October.
  11. Ronald G. Ehrenberg & Joshua L. Schwarz, 1987. "Public Sector Labor Markets," NBER Working Papers 1179, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Jeffrey M. Perloff & Michael L. Wachter, 1984. "Wage comparability in the U.S. postal service," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 38(1), pages 26-37, October.
  13. Joseph E. Stiglitz, 1986. "Theories of Wage Rigidity," NBER Working Papers 1442, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Mellow, Wesley S, 1981. "Unionism and Wages: A Longitudinal Analysis," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 43-52, February. [Downloadable!] (restricted)
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  1. Lawrence Katz & Alan Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," Working Papers 662, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  2. repec:fth:prinin:282 is not listed on IDEAS
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