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Job Satisfaction and Self-Selection into the Public or Private Sector: Evidence from a Natural Experiment

  • Natalia Danzer


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 sectorspecific job characteristics. A natural experiment —the massive privatization process inpost-Soviet countries—allows correcting potential self-selection bias. Industry-specificprivatization probabilities are assigned to workers based on unique individual-level surveyinformation regarding pre-determined Soviet jobs during the 1980s. The results reveal acausal public-sector satisfaction premium and a negative selection of individuals intothe public sector. Part of the public-private satisfaction gap can be explained by thedifferent availability of fringe benefits in the two sectors.

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Paper provided by Ifo Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 169.

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Date of creation: 2013
Date of revision:
Handle: RePEc:ces:ifowps:_169
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