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Controlling the Public Wage Bill in Portugal: The Case of University Professors

Author

Listed:
  • Alfredo M. Pereira

    (Department of Economics, College of William and Mary)

  • Rui Manuel Pereira

    (Faculdade de Ciencias e Tecnologia, Universidade Nova de Lisboa)

Abstract

Public wages are a large share of the public budget in Portugal and, therefore, hiring freezes are a central feature of the efforts to control the public deficit. The system of public career advancement, however, may lead to increases in the wage bill even in the presence of hiring freezes. We estimate this wage drift effect in the case of university professors. We use a logit analysis with 1999 census data to identify the determinants of career advancement, to estimate the employment distribution in previous years, and to obtain the corresponding wage bill. We estimate that the annual wage drift is 2.6%, a figure well above the GDP growth rate and, therefore, we conclude that hiring freezes may be far from enough to stop the expansion of the public wage bill.

Suggested Citation

  • Alfredo M. Pereira & Rui Manuel Pereira, 2006. "Controlling the Public Wage Bill in Portugal: The Case of University Professors," Working Papers 36, Department of Economics, College of William and Mary, revised 11 Aug 2006.
    • Handle: RePEc:cwm:wpaper:36
    as

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    References listed on IDEAS

    as
    1. Bas Klaauw & António Dias da Silva, 2011. "Wage dynamics and promotions inside and between firms," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(4), pages 1513-1548, October.
    2. Robert Gibbons & Michael Waldman, 1999. "A Theory of Wage and Promotion Dynamics Inside Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1321-1358.
    3. George Baker & Michael Gibbs & Bengt Holmstrom, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 881-919.
    4. McCue, Kristin, 1996. "Promotions and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 14(2), pages 175-209, April.
    5. Robert Gibbons, 1996. "Incentives and Careers in Organizations," NBER Working Papers 5705, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    public wages; budgetary restraint.;

    JEL classification:

    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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