Higher wages, lower pay : public vs. private sector compensation in Peru
Do public sector employees earn less than their counterparts in the private sector? This paper addresses this question in the case of Peru, a country where civil service reform is being debated yet the only available empirical studies on wage differentials date back to the late 1980s. Using data from the 2009 national household survey, the authors perform a multiple step analysis. First, they estimate a single equation with a public sector dummy, which is found to be statistically significant and positive when only monetary wages are taken into account. However, when in-kind payments and bonuses are included to measure compensation, the analysis finds a private sector premium. Second, they estimate for public and formal private employees two distinct wage functions, including the inverse Mills ratio. This takes into account the selection bias resulting from workers self-selecting into the public or private sector. Third, these results are used to decompose wage differentials using the standard Oaxaca-Blinder approach. The results show that the compensation differentials are not significant except for the sub-sample of employees that achieved a postgraduate degree.
|Date of creation:||01 Oct 2011|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
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.:
- Axel Heitmueller, 2006. "Public-private sector pay differentials in a devolved Scotland," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 295-323, November.
- Blomquist, N Soren, 1979. " Wage Rates and Personal Characteristics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(4), pages 505-520.
- Anos Casero, Paloma & Seshan, Ganesh, 2006. "Public-private sector wage differentials and returns to education in Djibouti," Policy Research Working Paper Series 3923, The World Bank.
- Ugo Panizza, 2001. "Public Sector Wages and Bureaucratic Quality: Evidence from Latin America," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2001), pages 97-152, August.
- Stelcner, M. & Van Der Gaag, J. & Vijverberg, W., 1988. "Public-Private Sector Wage Differentials In Peru, 1985-86," Papers 41, World Bank - Living Standards Measurement.
- Panizza, Ugo & Qiang, Christine Zhen-Wei, 2005. "Public-private wage differential and gender gap in Latin America: Spoiled bureaucrats and exploited women?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 34(6), pages 810-833, 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.
- van der Gaag, Jacques & Stelcner, Morton & Vijverberg, Wim, 1989. "Wage Differentials and Moonlighting by Civil Servants: Evidence from Cote d'Ivoire and Peru," World Bank Economic Review, World Bank Group, vol. 3(1), pages 67-95, January.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:5858. 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: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.