Productivity and Wage Differentials between Private and Public Sector in the Developing Countries (Gelismekte Olan Ülkelerde Özel ve Kamu Sektöründeki Verimlilik ve Ücret Farklilasmasi)
The structure of the public sector in developing economies is likely to affect private sector wage and employment decisions and hence, have an influence on the aggregate labour market. In this paper, excess public employment is analyzed under the efficiency wage framework to find out how wage and effort (productivity) differentials between public and private sectors actually affect the labour market or more specifically equilibrium levels of employment, wages and productivity. These differentials are assumed to be exogenous first but later on this assumption is relaxed and they are endogenized. The paper investigates how the total welfare responds to changes in these differentials in terms of two different models. The results show that an effort of raising employment by the government eventually leads to a reduction in total welfare by curbing private employment. We contribute to the existing work by providing a different approach by defining an explicit outside option, namely the government sector, to the efficiency wage theory.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (90 312) 507 5000
Fax: (90 312) 507 5640
Web page: http://www.tcmb.gov.tr
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sherwin Rosen, 1985.
"Implicit Contracts: A Survey,"
NBER Working Papers
1635, National Bureau of Economic Research, Inc.
- Aysit Tansel, 1999.
"Public-Private Employment Choice, Wage Differentials and Gender in Turkey,"
9913, Economic Research Forum, revised May 1999.
- Tansel, Avsit, 2005. "Public-Private Employment Choice, Wage Differentials, and Gender in Turkey," Economic Development and Cultural Change, University of Chicago Press, vol. 53(2), pages 453-77, January.
- Tansel, Aysit, 2004. "Public-Private Employment Choice, Wage Differentials and Gender in Turkey," IZA Discussion Papers 1262, Institute for the Study of Labor (IZA).
- Tansel, A., 1999. "Public_Private Employment Choice, Wage Differential and Gender in Turkey," Papers 797, Yale - Economic Growth Center.
- Yann Algan & Pierre Cahuc & André Zylberberg, 2002.
"Public Employment and Labor Market Performances,"
Sciences Po publications
info:hdl:2441/8846, Sciences Po.
- Yann Algan & Pierre Cahuc & AndrÃ© Zylberberg, 2002. "Public employment and labor market performances," Working Papers 250928, Institut National de la Recherche Agronomique, France.
- Yann Algan & Pierre Cahuc & André Zylberberg, 2002. "Public employment and labor market performances," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00256207, HAL.
- Jim Malley & Thomas Moutos, 1992.
"Does Government Employment "Crowd-Out" Private Employment?: Evidence from Sweden,"
Working Papers Series
92/16, University of Stirling, Division of Economics.
- Malley, Jim & Moutos, Thomas, 1996. " Does Government Employment "Crowd-Out" Private Employment? Evidence from Sweden," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 289-302, June.
- David Blanchflower, 1996. "The Role and Influence of Trade Unions in the OECD," CEP Discussion Papers dp0310, Centre for Economic Performance, LSE.
- William T. Dickens, 1986. "Wages, Employment and the Threat of Collective Action by Workers," NBER Working Papers 1856, National Bureau of Economic Research, Inc.
- Terrell, Katherine, 1993. "Public-private wage differentials in Haiti Do public servants earn a rent?," Journal of Development Economics, Elsevier, vol. 42(2), pages 293-314, December.
- Pisauro, Giuseppe, 1991. "The effect of taxes on labour in efficiency wage models," Journal of Public Economics, Elsevier, vol. 46(3), pages 329-345, December.
- Bulkley, George & Myles, Gareth D, 1996. "Trade Unions, Efficiency Wages, and Shirking," Oxford Economic Papers, Oxford University Press, vol. 48(1), pages 75-88, January.
- Mueller, Richard E., 1998. "Public-private sector wage differentials in Canada: evidence from quantile regressions," Economics Letters, Elsevier, vol. 60(2), pages 229-235, August.
- Ronald G. Ehrenberg & Joshua L. Schwarz, 1983.
"Public Sector Labor Markets,"
NBER Working Papers
1179, National Bureau of Economic Research, Inc.
- Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
- Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
- Holmlund, Bertil, 1997. "Macroeconomic Implications of Cash Limits in the Public Sector," Economica, London School of Economics and Political Science, vol. 64(253), pages 49-62, February.
- Rodrik, Dani, 2000. "What Drives Public Employment in Developing Countries?," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 229-43, October.
- Ugo Panizza, 2001. "Public Sector Wages and Bureaucratic Quality: Evidence from Latin America," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May.
- International Monetary Fund, 1997. "Corruption and the Rate of Temptation; Do Low Wages in the Civil Service Cause Corruption?," IMF Working Papers 97/73, International Monetary Fund.
- Rauch, James E & Evans, Peter B., 1999.
"Bureaucratic Structure and Bureaucratic Performance in Less Developed Countries,"
University of California at San Diego, Economics Working Paper Series
qt0sb0w38d, Department of Economics, UC San Diego.
- Rauch, James E. & Evans, Peter B., 2000. "Bureaucratic structure and bureaucratic performance in less developed countries," Journal of Public Economics, Elsevier, vol. 75(1), pages 49-71, January.
- Di Tella, Rafael & Schargrodsky, Ernesto, 2003. "The Role of Wages and Auditing during a Crackdown on Corruption in the City of Buenos Aires," Journal of Law and Economics, University of Chicago Press, vol. 46(1), pages 269-92, April.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
- Carmichael, H Lorne, 1990. "Efficiency Wage Models of Unemployment--One View," Economic Inquiry, Western Economic Association International, vol. 28(2), pages 269-95, April.
- Tansel, Aysit, 2002. "Determinants of school attainment of boys and girls in Turkey: individual, household and community factors," Economics of Education Review, Elsevier, vol. 21(5), pages 455-470, October.
- Assaad, Ragui, 1997. "The Effects of Public Sector Hiring and Compensation Policies on the Egyptian Labor Market," World Bank Economic Review, World Bank Group, vol. 11(1), pages 85-118, January.
- Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
- Aysit Tansel, 1999. "Public-Private Employment Choice, Wage Differentials and Gender in Turkey," Working Papers 797, Economic Growth Center, Yale University.
- Rama, Martin, 1999. "Public Sector Downsizing: An Introduction," World Bank Economic Review, World Bank Group, vol. 13(1), pages 1-22, January.
When requesting a correction, please mention this item's handle: RePEc:tcb:wpaper:1103. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ozlem Ekmekciler Ramalho Rocha)or (Ilker Cakar)
If references are entirely missing, you can add them using this form.