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Heterogeneity and the Public Sector Wage Policy

Author

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  • Gomes, Pedro Maia

    (Birkbeck, University of London)

Abstract
A model with search and matching frictions and heterogeneous workers was established to evaluate a reform of the public sector wage policy in steady-state. The model was calibrated to the UK economy based on Labour Force Survey data. A review of the pay received by all public sector workers to align the distribution of wages with the private sector reduces steady-state unemployment by 1.4 percentage points.

Suggested Citation

  • Gomes, Pedro Maia, 2017. "Heterogeneity and the Public Sector Wage Policy," IZA Discussion Papers 11091, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11091
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Fontaine, Idriss & Gálvez-Iniesta, Ismael & Gomes, Pedro & Vila-Martin, Diego, 2020. "Labour market flows: Accounting for the public sector," Labour Economics, Elsevier, vol. 62(C).
    2. Boeri, Tito & di Porto, Edoardo & Naticchioni, Paolo & Scrutinio, Vincenzo, 2021. "Friday Morning Fever. Evidence from a Randomized Experiment on Sick Leave Monitoring in the Public Sector," IZA Discussion Papers 14346, Institute of Labor Economics (IZA).
    3. Chassamboulli, Andri & Fontaine, Idriss & Gomes, Pedro, 2020. "How important are worker gross flows between public and private sector?," Economics Letters, Elsevier, vol. 192(C).
    4. Stelios Sakkas & Petros Varthalitis, 2021. "Public Debt Consolidation and its Distributional Effects," Manchester School, University of Manchester, vol. 89(S1), pages 131-174, September.
    5. Leone Leonida & Antonio Giangreco & Sergio Scicchitano & Marco Biagetti, 2023. "Britain and BrExit: Is the UK more attractive to supervisors? An analysis of the wage premium to supervision across the EU," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 291-312, June.
    6. Jofre-Monseny, Jordi & Silva, José I. & Vázquez-Grenno, Javier, 2020. "Local labor market effects of public employment," Regional Science and Urban Economics, Elsevier, vol. 82(C).
    7. Michael, Maria & Christofides, Louis N., 2020. "The impact of austerity measures on the public - private sector wage gap in Europe," Labour Economics, Elsevier, vol. 63(C).
    8. Andrea Camilli & Pedro Gomes, 2023. "Public employment and homeownership dynamics," Public Choice, Springer, vol. 194(1), pages 101-155, January.
    9. Feng, Shuaizhang & Guo, Naijia, 2021. "Labor market dynamics in urban China and the role of the state sector," Journal of Comparative Economics, Elsevier, vol. 49(4), pages 918-932.
    10. Lucas Navarro & Mauricio Tejada, 2022. "Does Public Sector Employment Buffer the Minimum Wage Effects?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 168-196, January.
    11. Geromichalos, Athanasios & Kospentaris, Ioannis, 2022. "The unintended consequences of meritocratic government hiring," European Economic Review, Elsevier, vol. 144(C).
    12. Chassamboulli, Andri & Gomes, Pedro, 2023. "Public-sector employment, wages and education decisions," Labour Economics, Elsevier, vol. 82(C).
    13. Andri Chassamboulli & Pedro Gomes, 2021. "Jumping the queue: nepotism and public-sector pay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 344-366, January.
    14. Rattsø, Jørn & Stokke, Hildegunn E., 2020. "Private-public wage gap and return to experience: Role of geography, gender and education," Regional Science and Urban Economics, Elsevier, vol. 84(C).
    15. Sakkas, Stelios & Varthalitis, Petros, 2018. "The (intertemporal) equity-efficiency trade-off of fiscal consolidation," MPRA Paper 90983, University Library of Munich, Germany.
    16. Andri Chassamboulli & Pedro Gomes, 2021. "Jumping the queue: nepotism and public-sector pay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 344-366, January.
    17. Bettoni, Luis G. & Santos, Marcelo R., 2022. "Public sector employment and aggregate fluctuations," Journal of Macroeconomics, Elsevier, vol. 72(C).
    18. Garibaldi, Pietro & Gomes, Pedro Maia, 2022. "Temporary Replacement Workers in a Matching Model with Employment at Will," IZA Discussion Papers 15503, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    public sector wage premium; public sector wages; public sector employment; unemployment; skilled workers; worker heterogeneity;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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