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Putting a price on tenure

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  • Marzagão, Thiago

Abstract

Government employees in Brazil are granted tenure after three years on the job. Firing a tenured government employee is all but impossible, so tenure is a big employee benefit. But exactly how big is it? In other words: how much money is tenure worth to a government employee in Brazil? No one has ever attempted to answer that question. I do that in this paper. I 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 to each employee. I find that in the 2005-2019 period the monthly value of tenure was R$ 3980 to the median federal government employee, R$ 1971 to the median state government employee, and R$ 500 to the median municipal government employee.

Suggested Citation

  • Marzagão, Thiago, 2021. "Putting a price on tenure," OSF Preprints dvy9w_v1, Center for Open Science.
    • Handle: RePEc:osf:osfxxx:dvy9w_v1
    DOI: 10.31219/osf.io/dvy9w_v1
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    References listed on IDEAS

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    1. Tiago Cavalcanti & Marcelo SantosInsper, 2021. "(MIS)Allocation Effects of an Overpaid Public Sector," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 953-999.
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