Putting a Price on Tenure
6 Pages Posted: 14 Apr 2021
Date Written: March 26, 2021
Government employees in Brazil are granted tenure after three years of taking their entrance exams. Firing a tenured government employee is all but impossible, so tenure is a big perquisite. But exactly how big is it? No one has ever attempted to estimate the monetary equivalent of tenure for Brazilian government workers. We do that in this paper. We use a modified version of the Sharpe ratio to estimate what the risk-adjusted salaries of government workers should be. The difference between actual salary and risk-adjusted salary gives us an estimate of how much tenure is worth for each employee. We find that the median value of tenure is R$ 4517 for federal government employees, R$ 2560 for state government employees, and R$ 672 for municipal government employees.
Keywords: public sector labor markets, non-wage labor costs and benefits, portfolio choice
JEL Classification: J450, J320, G110
Suggested Citation: Suggested Citation