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Wage differentials and state-private sector employment choice in the Federal Republic of Yugoslavia

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  • Lokshin, Michael M.
  • Jovanovic, Branko

Abstract

The authors use the newly available Yugoslavian Labor Force Survey data to investigate wage differentials and employment decisions in the state and private sectors in Yugoslavia. For the analysis the authors use three empirical models that rely on different statistical assumptions. They extend the standard switching regression model to allow non-normality in the joint distribution of the error terms. After correcting for the sector selection bias and controlling for workers'characteristics the authors find a private sector wage advantage. The wage premium is largest for workers with low education levels and declining for workers with higher educational levels. Given the regulatory and tax policies that pushed the private sector into the informal sphere of the economy during the period covered by our data, the authors argue that the state-private wage gap is likely to grow in the future. This will make it increasingly difficult for the state sector to attract and retain highly skilled employees.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2959.

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Date of creation: 31 Jan 2003
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Handle: RePEc:wbk:wbrwps:2959

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Related research

Keywords: Health Monitoring&Evaluation; Decentralization; Agricultural Knowledge&Information Systems; Public Health Promotion; Economic Theory&Research; Health Monitoring&Evaluation; Economic Theory&Research; Agricultural Knowledge&Information Systems; National Governance; Banks&Banking Reform;

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References

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  1. Adamchik, Vera A. & Bedi, Arjun S., 2000. "Wage differentials between the public and the private sectors: evidence from an economy in transition," Labour Economics, Elsevier, vol. 7(2), pages 203-224, March.
  2. Falaris, Evangelos M., 2004. "Private and public sector wages in Bulgaria," Journal of Comparative Economics, Elsevier, vol. 32(1), pages 56-72, March.
  3. Branko Jovanovic & Michael M. Lokshin, 2004. "Wage Differentials between the State and Private Sectors in Moscow," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 107-123, 03.
  4. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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Cited by:
  1. Sylvie Démurger & Shi Li & Juan Yang, 2012. "Earnings Differentials between the Public and Private Sectors in China: Exploring Changes for Urban Local Residents in the 2000s," Post-Print halshs-00627719, HAL.
  2. Linz, Susan J. & Semykina, Anastasia, 2009. "Personality traits as performance enhancers? A comparative analysis of workers in Russia, Armenia and Kazakhstan," Journal of Economic Psychology, Elsevier, vol. 30(1), pages 71-91, February.
  3. Gorodnichenko, Yuriy & Sabirianova Peter, Klara, 2007. "Public sector pay and corruption: Measuring bribery from micro data," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 963-991, June.
  4. Kosovka Ognjenovic, 2011. "Wage Differences between the Private and the Public Sector in Serbia: Some Evidence from Survey Data," wiiw Balkan Observatory Working Papers 091, The Vienna Institute for International Economic Studies, wiiw.
  5. World Bank, 2008. "Kosovo - Youth in Jeopardy : Being Young, Unemployed, and Poor in Kosovo," World Bank Other Operational Studies 7895, The World Bank.
  6. Monojit Chatterji & Terhi Maczulskij & Jaakko Pehkonen, 2008. "Public Sector Pay in Finland," Dundee Discussion Papers in Economics 213, Economic Studies, University of Dundee.
  7. Nguyen Danh, Hoang Long, 2002. "public-private sector wage differentials for males and females in vietnam," MPRA Paper 6583, University Library of Munich, Germany.
  8. Richard Disney & Jelena Laušev, . "Monopsony With Heterogeneous Labour: Evidence From Economic Transition," Discussion Papers 11/11, University of Nottingham, School of Economics.

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