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Job satisfaction and self-selection into the public or private sector: Evidence from a natural experiment

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  • Danzer, Natalia

Abstract

Are public sector jobs better than private sector jobs? To answer this question, this paper investigates observed differences in job satisfaction between public- and private-sector workers and disentangles the effect of worker sorting from the one caused by sector-specific job characteristics. A natural experiment—the massive privatization process in post-Soviet countries—allows correcting potential self-selection bias in a unique and nationally representative Ukrainian survey for the years 2003 to 2007. Unanticipated industry-specific privatization probabilities are assigned to workers based on retrospective information on their personal jobs held during Soviet times—well in advance of the onset of the privatization process and the emergence of a private sector. The results reveal a causal public-sector satisfaction premium and suggest a negative selection of individuals into the public sector. Part of the public-private satisfaction gap can be explained by the different availability of fringe benefits in the two sectors.

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  • Danzer, Natalia, 2019. "Job satisfaction and self-selection into the public or private sector: Evidence from a natural experiment," Labour Economics, Elsevier, vol. 57(C), pages 46-62.
  • Handle: RePEc:eee:labeco:v:57:y:2019:i:c:p:46-62
    DOI: 10.1016/j.labeco.2019.01.002
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    2. Theodora Papavasili & Achilleas Kontogeorgos & Thomas Siskou & Fotios Chatzitheodoridis, 2019. "Municipal Employees in the Era of Economic Crisis: Exploring Their Job Satisfaction," Public administration issues, Higher School of Economics, issue 5, pages 120-139.
    3. Meier, Volker & Schiopu, Ioana, 2015. "Optimal higher education enrollment and productivity externalities in a two-sector model," Journal of Public Economics, Elsevier, vol. 121(C), pages 1-13.
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    5. Rodrigo Montero & Diego Vásquez, 2015. "Job Satisfaction and Reference Wages: Evidence for a Developing Country," Journal of Happiness Studies, Springer, vol. 16(6), pages 1493-1507, December.
    6. Antonio Di Paolo, 2012. "(Endogenous) occupational choices and job satisfaction among recent PhD recipients: evidence from Catalonia," Working Papers XREAP2012-21, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2012.
    7. Klemm, Marcus, 2012. "Job Security and Fertility: Evidence from German Reunification," Ruhr Economic Papers 379, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Krause-Pilatus, Annabelle & Rinne, Ulf & Schneider, Hilmar, 2019. "Arbeitszufriedenheit in der modernen Arbeitswelt," IZA Standpunkte 94, Institute of Labor Economics (IZA).
    9. Krause-Pilatus, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute of Labor Economics (IZA).
    10. Marcus Klemm, 2012. "Job Security and Fertility: Evidence from German Reunification," Ruhr Economic Papers 0379, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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    More about this item

    Keywords

    Public sector; Job satisfaction; Self-selection; Quasi-experiment; Privatization; Fringe benefits; Emerging economies;
    All these keywords.

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • P35 - Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance

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