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Wage Differentials and Moonlighting by Civil Servants: Evidence from Cote d'Ivoire and Peru

Author

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  • van der Gaag, Jacques
  • Stelcner, Morton
  • Vijverberg, Wim

Abstract

As part of their efforts to reduce fiscal deficits, many governments have allowed public sector salaires to erode, often on the assumption that government workers are overpaid vis-a-vis those in the private sector. We test that assumption by analyzing public-private pay differentials in the Ivory Coast and Peru. Switching regressions models are estimated using full information maximum likelihood (FIML), and the results are compared to those obtained useing ordinary least squares (OLS) techniques. The OLS yields seriously biased estimates of the pay structure, suggesting that public wages are higher than private wages; the FIML estimates show the opposite. Our probit analysis also shows that the wage disadvantage of civil servants is a determinant of the greater prevalence of moonlighting among public than private employees. The evidence suggests that reductions in employment rather than pay, while being less palatable in the short term, will be more effective in the long run. Copyright 1989 by Oxford University Press.

Suggested Citation

  • van der Gaag, Jacques & Stelcner, Morton & Vijverberg, Wim, 1989. "Wage Differentials and Moonlighting by Civil Servants: Evidence from Cote d'Ivoire and Peru," The World Bank Economic Review, World Bank, vol. 3(1), pages 67-95, January.
    • Handle: RePEc:oup:wbecrv:v:3:y:1989:i:1:p:67-95
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    Citations

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    Cited by:

    1. Asma Hyder & Barry Reilly, 2005. "The Public and Private Sector Pay Gap in Pakistan: A Quantile Regression Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(3), pages 271-306.
    2. Phanhpakit Onphanhdala & Terukazu Suruga, 2007. "Education and Earnings in Transition: The Case of Lao," Asian Economic Journal, East Asian Economic Association, vol. 21(4), pages 405-424, December.
    3. Mills, Bradford F. & Sahn, David E., 1997. "Labor Market Segmentation and the Implications for Public Sector Retrenchment Programs," Journal of Comparative Economics, Elsevier, vol. 25(3), pages 385-402, December.
    4. Nadeem ul Haque & Musleh Ud Din (ed.), 2006. "Public Sector Efficiency Perspectives On Civil Service Reform," PIDE Books, Pakistan Institute of Development Economics, number 2006:2.
    5. Adamchik, Vera A. & Bedi, Arjun S., 2000. "Wage differentials between the public and the private sectors: evidence from an economy in transition," Labour Economics, Elsevier, vol. 7(2), pages 203-224, March.
    6. Gabriela Grotkowska & Leszek Wincenciak, 2014. "Public sector wage premium in Poland: can it be explained by structural differences in employment?," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 38.
    7. Coppola, Andrea & Calvo-Gonzalez, Oscar, 2011. "Higher wages, lower pay : public vs. private sector compensation in Peru," Policy Research Working Paper Series 5858, The World Bank.
    8. Ebo Botchway & Kofi Fred Asiedu, 2020. "Ownership type and earnings gap decomposition: Evidence from the Ghanaian labor market," African Development Review, African Development Bank, vol. 32(4), pages 619-631, December.
    9. Keith A. Bender, 1998. "The Central Government‐Private Sector Wage Differential," Journal of Economic Surveys, Wiley Blackwell, vol. 12(2), pages 177-220, April.
    10. Lesueur, Jean-Yves & Plane, Patrick, 1995. "Structures industrielles et stratégies salaire-emploi en Côte d’Ivoire," L'Actualité Economique, Société Canadienne de Science Economique, vol. 71(3), pages 291-307, septembre.
    11. repec:pru:wpaper:33 is not listed on IDEAS
    12. Phanhpakit ONPHANHDALA & Terukazu SURUGA, 2007. "Education and Earnings in Lao PDR: Further Results," GSICS Working Paper Series 16, Graduate School of International Cooperation Studies, Kobe University.
    13. Schaffner, Julie Anderson, 1998. "Premiums to employment in larger establishments: evidence from Peru," Journal of Development Economics, Elsevier, vol. 55(1), pages 81-113, February.

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