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Fiscal Transfers, Public Sector Wage Premium and the Effects on Private Wages

Author

Listed:
  • Marcelo Capello

    (Universidad Nacional de Córdoba, Facultad de Ciencias Económicas (Córdoba, Argentina). Fundación Mediterránea, Instituto de Estudios sobre la Realidad Argentina y Latinoamericana (Córdoba, Argentina))

  • Alberto José Figueras

    (Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas (Córdoba, Argentina))

  • Sebastián Freille

    (Universidad Católica de Córdoba, Facultad de Ciencia Política y Relaciones Internacionales (Córdoba, Argentina). Consejo Nacional de Investigaciones Científicas y Técnicas (Buenos Aires, Argentina). Universidad Nacional de Córdoba, Facultad de Ciencias Económicas (Córdoba, Argentina))

  • Pedro Esteban Moncarz

    (Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas (Córdoba, Argentina))

Abstract

We examine the relationship between federal transfers, the existence of a wage premium for the public sector and its effects on private wages in Argentina. The empirical analysis is based on the theoretical presumption that federal fiscal transfers to the different regions are being used to finance more public employment therefore discouraging private activity. The results suggest that the public sector pays a wage premium relative to the private sector. This premium is increasing in the level of per capita federal transfers. There is no evidence of an overall positive effect on wages in the private manufacturing sector. However, we find a significant positive relationship between federal transfers and wages paid to workers with less formal education; for jobs requiring a technical or profesional qualification the relationship is negative. These results broadly support the hypothesis that the private sector faces harder competition in the labour market in provinces which receive larger transfers from the central government. / Se examina la relación entre transferencias federales, la existencia de un premio salarial en el sector público y sus efectos sobre los salarios privadosen Argentina. El análisis empírico se basa en la presunción teórica que las transferencias fiscales desde el gobierno federal se utilizan para financiar mayor empleo público desincentivando la actividad privada. Los resultados sugieren que el sector público paga un premio salarial. Este premio escreciente en el nivel de transferencias por habitante. No hay evidencia deun efecto agregado positivo sobre los salarios privados. Sin embargo se encuentra una relación positiva y significativa entre transferencias y los salarios pagados a trabajadores con menor educación, para trabajos que requieren una calificación técnica ó profesional la relación es negativa. Los resultados apoyan, en general, la hipótesis que el sector privado enfrenta una mayor competencia en los mercados de trabajo en aquellas provincias que reciben mayores transferencias desde el gobierno central.

Suggested Citation

  • Marcelo Capello & Alberto José Figueras & Sebastián Freille & Pedro Esteban Moncarz, 2009. "Fiscal Transfers, Public Sector Wage Premium and the Effects on Private Wages," Revista de Economía y Estadística, Universidad Nacional de Córdoba, Facultad de Ciencias Económicas, Instituto de Economía y Finanzas, vol. 47(2), pages 41-66, Diciembre.
    • Handle: RePEc:ief:reveye:v:47:y:2009:i:2:p:41-66
    DOI: 10.55444/2451.7321.2009.v47.n2.3864
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    References listed on IDEAS

    as
    1. Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2002. "Fiscal Policy, Profits, and Investment," American Economic Review, American Economic Association, vol. 92(3), pages 571-589, June.
    2. repec:hrv:faseco:3353756 is not listed on IDEAS
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    Cited by:

    1. Capello, Marcelo & Figueras, Alberto & Freille, Sebastian & Moncarz, Pedro, 2013. "The role of federal transfers in regional convergence in human development indicators in Argentina," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 27, pages 33-63.

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    More about this item

    Keywords

    Inter-governmental transfers; labour markets; wage premium; fiscal policy;
    All these keywords.

    JEL classification:

    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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