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Wage rates and job queues: does the public sector overpay in Ethiopia?

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  • Taye Mengistae

Abstract

In this paper I extend Lee's two-stage structural probit analysis in order to test and measure the existence and scope of a public sector job queue in Ethiopia. Recent urban household survey data reject the absence of job rationing in favour of an implicit queue of most private sector workers for public sector jobs. The queue is mainly due to the expectation of high public sector wage premiums. Controlling for individual differences in the expected sectoral wage differential, I find that skill is not a significant influence on the sector preference of a worker. Parental employment background and gender are. Public sector employers are cost mininmising agents in selecting from the queue: for a given wage rate, more skilled workers are more likely to be selected while, other things being equal, workers on the lower end of the public sector pay scale also have a greater chance of being selected.

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  • Taye Mengistae, 1998. "Wage rates and job queues: does the public sector overpay in Ethiopia?," CSAE Working Paper Series 1998-20, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:1998-20
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    Cited by:

    1. Adeola F. Adenikinju & Olugboyega Oyeranti, 1999. "Characteristics and Behaviour of African Factor Markets and Market Institutions and Their Consequences for Economic Growth," CID Working Papers 31A, Center for International Development at Harvard University.
    2. Fábio Veras Soares, 2004. "Do Informal Workers Queue For Formal Jobs in Brazil ?," Discussion Papers 1021, Instituto de Pesquisa Econômica Aplicada - IPEA.
    3. Hyder, Asma, 2007. "Wage Differentials, Rate of Return toEducation, and Occupational WageShare in the Labour Market of Pakistan," MPRA Paper 2224, University Library of Munich, Germany.
    4. Asma Hyder, 2007. "Employment Preferences and Length of Job Queues in Pakistan," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 1(4), pages 383-401, December.
    5. Martín Rama, 2003. "The Sri Lankan Unemployment Problem Revisited," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 510-525, August.
    6. Abu, Girma Moges, 2005. "The Distributional Implications of personal Income Tax Reforms: The case of Civil Service sector in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 9(2), pages 130-130, May.
    7. Asma Hyder, 2007. "Preference for Public Sector Jobs and Wait Unemployment: A Micro Data Analysis," PIDE-Working Papers 2007:20, Pakistan Institute of Development Economics.
    8. Pieter Serneels, 2007. "The Nature of Unemployment among Young Men in Urban Ethiopia," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 170-186, February.
    9. Asma, Hyder, 2007. "Employment Preferences and Length of Job Queues in Pakistan: An Update," MPRA Paper 19572, University Library of Munich, Germany.
    10. Bold, Tessa & Barton, Nicholas & Sandefur, Justin, 2017. "Measuring Rents from Public Employment: Regression discontinuity evidence from Kenya," CEPR Discussion Papers 12105, C.E.P.R. Discussion Papers.
    11. Nicholas Barton & Tessa Bold & Justin Sandefur, 2017. "Measuring Rents from Public Employment: Regression Discontinuity Evidence from Kenya - Working Paper 457," Working Papers 457, Center for Global Development.
    12. Bales, Sarah & Rama, Martin, 2001. "Are public sector workers underpaid? - Appropriate comparators in a developing country," Policy Research Working Paper Series 2747, The World Bank.
    13. Nath,Shanjukta & Wieser,Christina, 2021. "What Explains Wage Differentials for Urban Wage Earners? : Returns to Education for Ethiopia’s UrbanWage Employed," Policy Research Working Paper Series 9879, The World Bank.
    14. Voxi Heinrich AMAVILAH, 2016. "Social Obstacles to Technology, Technological Change, and the Economic Growth of African Countries: Some Anecdotal Evidence from Economic History," Turkish Economic Review, KSP Journals, vol. 3(2), pages 320-340, June.
    15. World Bank, 2005. "Education in Ethiopia : Strengthening the Foundation for Sustainable Progress," World Bank Publications - Books, The World Bank Group, number 7434.

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    More about this item

    Keywords

    wage differentials; public sector labour markets; segmented labor markets; truncated and censored models; Ethiopia;
    All these keywords.

    JEL classification:

    • C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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