Why Do Lazy People Make More Money? The Strange Case of the Public Sector Wage Premium
Inter-American Development Bank Working Paper No. 403
23 Pages Posted: 28 Sep 1999
There are 2 versions of this paper
Why Do Lazy People Make More Money? The Strange Case of the Public Sector Wage Premium
Why Do Lazy People Make More Money? The Strange Case of the Public Sector Wage Premium
Date Written: August 1999
Abstract
Empirical work suggests the presence of a public sector wage premium. This paper investigates the theoretical reasons for the presence of a such a premium. The results of the paper are consistent with the higher premium paid to women and with the fact that the premium decreases with skills. The key insight of the paper is that job security undermines the incentive to work hard and forces the public sector to pay higher wages. One implication of the paper is that the public sector wage premium can be used as an indicator of inefficiency in the public sector.
JEL Classification: H50, J45
Suggested Citation: Suggested Citation
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