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Are Public Sector Workers Paid More Than Their Alternative Wage? Evidence from Longitudinal Data and Job Queues

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  • Alan B. Krueger

    (Princeton University)

Abstract

This paper performs a longitudinal comparison of public and private sector pay. Although not decisive because of small sample sizes, the results tend to corroborate the conclusions of previous cross-sectional studies. Specifically, I find that on average wages of federal workers exceed those of private sector workers by 10% to 25%, while wages of state and local government workers are roughly equivalent to or slightly less than the wages of private sector workers. Furthermore, these conclusions hold for a sample of workers who joined the government after being involuntarily displaced from their private sector jobs. In addition, a comparative analysis of the length of job queues suggests that on average more workers apply for job openings in the federal government than in the private sector. Finally, both longitudinal and cross-sectional analyses support the conclusion that the union wage gap is substantially smaller in the public sector than in the private sector.

Suggested Citation

  • Alan B. Krueger, 1987. "Are Public Sector Workers Paid More Than Their Alternative Wage? Evidence from Longitudinal Data and Job Queues," Working Papers 605, Princeton University, Department of Economics, Industrial Relations Section..
  • Handle: RePEc:pri:indrel:225
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    References listed on IDEAS

    as
    1. Alan B. Krueger, 1988. "The Determinants of Queues for Federal Jobs," ILR Review, Cornell University, ILR School, vol. 41(4), pages 567-581, July.
    2. Freeman, Richard B, 1984. "Longitudinal Analyses of the Effects of Trade Unions," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 1-26, January.
    3. Richard A. Ippolito, 1987. "Why Federal Workers Don't Quit," Journal of Human Resources, University of Wisconsin Press, vol. 22(2), pages 281-299.
    4. Borjas, George J, 1980. "Wage Determination in the Federal Government: The Role of Constituents and Bureaucrats," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1110-1147, December.
    5. Richard B. Freeman, 1987. "How Do Public Sector Wages and Employment Respond to Economic Conditions?," NBER Chapters, in: Public Sector Payrolls, pages 183-216, National Bureau of Economic Research, Inc.
    6. Mellow, Wesley & Sider, Hal, 1983. "Accuracy of Response in Labor Market Surveys: Evidence and Implications," Journal of Labor Economics, University of Chicago Press, vol. 1(4), pages 331-344, October.
    7. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    8. Ehrenberg, Ronald G. & Schwarz, Joshua L., 1987. "Public-sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 22, pages 1219-1260, Elsevier.
    9. Steven F. Venti, 1987. "Wages in the Federal and Private Sectors," NBER Chapters, in: Public Sector Payrolls, pages 147-182, National Bureau of Economic Research, Inc.
    10. Joseph F. Quinn, 1979. "Wage Differentials among Older Workers in the Public and Private Sectors," Journal of Human Resources, University of Wisconsin Press, vol. 14(1), pages 41-62.
    11. Martin Asher & Joel Popkin, 1984. "The Effect of Gender and Race Differentials on Public-Private Wage Comparisons: A Study of Postal Workers," ILR Review, Cornell University, ILR School, vol. 38(1), pages 16-25, October.
    12. Sharon P. Smith, 1976. "Pay Differentials between Federal Government and Private Sector Workers," ILR Review, Cornell University, ILR School, vol. 29(2), pages 179-197, January.
    13. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290, National Bureau of Economic Research, Inc.
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    16. Walter Fogel & David Lewin, 1974. "Wage Determination in the Public Sector," ILR Review, Cornell University, ILR School, vol. 27(3), pages 410-431, April.
    17. Joseph E. Stiglitz, 1984. "Theories of Wage Rigidity," NBER Working Papers 1442, National Bureau of Economic Research, Inc.
    18. Mellow, Wesley S, 1981. "Unionism and Wages: A Longitudinal Analysis," The Review of Economics and Statistics, MIT Press, vol. 63(1), pages 43-52, February.
    19. Ronald G. Ehrenberg & George T. Milkovich, 1987. "Compensation and Firm Performance," NBER Working Papers 2145, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Moundir, Lassassi & Menna, Khaled, 2016. "La Notion De « Femmes Au Foyer » En Algerie, Une Realite Ou Une Representation Nostalgique [The Notion Of “ Homemaker” In Algeria, A Reality Or A Nostalgic Representation]," MPRA Paper 85740, University Library of Munich, Germany.
    2. Jan K. Brueckner & David Neumark, 2014. "Beaches, Sunshine, and Public Sector Pay: Theory and Evidence on Amenities and Rent Extraction by Government Workers," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 198-230, May.
    3. Bahman Bahrami & John Bitzan & Jay Leitch, 2009. "Union Worker Wage Effect in the Public Sector," Journal of Labor Research, Springer, vol. 30(1), pages 35-51, March.
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    More about this item

    Keywords

    public sector; wage differentials; longitudinal data;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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