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Wage rates and job queues: does the public sector overpay in Ethiopia?

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  • Taye Mengistae

Abstract

In this paper I extend Lee's two-stage structural probit analysis in order to test and measure the existence and scope of a public sector job queue in Ethiopia. Recent urban household survey data reject the absence of job rationing in favour of an implicit queue of most private sector workers for public sector jobs. The queue is mainly due to the expectation of high public sector wage premiums. Controlling for individual differences in the expected sectoral wage differential, I find that skill is not a significant influence on the sector preference of a worker. Parental employment background and gender are. Public sector employers are cost mininmising agents in selecting from the queue: for a given wage rate, more skilled workers are more likely to be selected while, other things being equal, workers on the lower end of the public sector pay scale also have a greater chance of being selected.

Suggested Citation

  • Taye Mengistae, 1998. "Wage rates and job queues: does the public sector overpay in Ethiopia?," CSAE Working Paper Series 1998-20, Centre for the Study of African Economies, University of Oxford.
  • Handle: RePEc:csa:wpaper:1998-20
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    References listed on IDEAS

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    8. Lee, Lung-fei & Maddala, G S & Trost, R P, 1980. "Asymptotic Covariance Matrices of Two-Stage Probit and Two-Stage Tobit Methods for Simultaneous Equations Models with Selectivity," Econometrica, Econometric Society, vol. 48(2), pages 491-503, March.
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    10. Gyourko, Joseph & Tracy, Joseph, 1988. "An Analysis of Public- and Private-Sector Wages Allowing for Endogenous Choices of Both Government and Union Status," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 229-253, April.
    11. van der Gaag, Jacques & Vijverberg, Wim, 1988. "A Switching Regression Model for Wage Determinants in the Public and Private Sectors of a Developing Country," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 244-252, May.
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    13. Heywood, John S & Mohanty, Madhu S, 1994. "The Role of Employer and Workplace Size in the U.S. Federal Sector Job Queue," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(2), pages 171-188, May.
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    Citations

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    Cited by:

    1. Asma Hyder, 2007. "Preference for Public Sector Jobs and Wait Unemployment : A Micro Data Analysis," Labor Economics Working Papers 22196, East Asian Bureau of Economic Research.
    2. Adeola F. Adenikinju & Olugboyega Oyeranti, 1999. "Characteristics and Behaviour of African Factor Markets and Market Institutions and Their Consequences for Economic Growth," CID Working Papers 31A, Center for International Development at Harvard University.
    3. MartÌn Rama, 2003. "The Sri Lankan Unemployment Problem Revisited," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 510-525, August.
    4. Pieter Serneels, 2002. "Explaining Non-Negative Duration Dependence Among the Unemployed," CSAE Working Paper Series 2002-13, Centre for the Study of African Economies, University of Oxford.
    5. Pieter Serneels, 2004. "The Nature of Unemployment in Urban Ethiopia," CSAE Working Paper Series 2004-01, Centre for the Study of African Economies, University of Oxford.
    6. Fábio Veras Soares, 2004. "Do Informal Workers Queue For Formal Jobs in Brazil ?," Discussion Papers 1021, Instituto de Pesquisa Econômica Aplicada - IPEA.
    7. Hyder, Asma, 2007. "Wage Differentials, Rate of Return toEducation, and Occupational WageShare in the Labour Market of Pakistan," MPRA Paper 2224, University Library of Munich, Germany.
    8. World Bank, 2005. "Education in Ethiopia : Strengthening the Foundation for Sustainable Progress," World Bank Publications, The World Bank, number 7434, August.
    9. Bales, Sarah & Rama, Martin, 2001. "Are public sector workers underpaid? - Appropriate comparators in a developing country," Policy Research Working Paper Series 2747, The World Bank.
    10. Voxi Heinrich AMAVILAH, 2016. "Social Obstacles to Technology, Technological Change, and the Economic Growth of African Countries: Some Anecdotal Evidence from Economic History," Turkish Economic Review, KSP Journals, vol. 3(2), pages 320-340, June.
    11. Abu, Girma Moges, 2000. "The Distributional Implications of personal Income Tax Reforms: The case of Civil Service sector in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 9(2).

    More about this item

    Keywords

    wage differentials; public sector labour markets; segmented labor markets; truncated and censored models; Ethiopia;

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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