Public and private sector wages interactions in a general equilibrium model

Fernández-de-Córdoba, Gonzalo; Pérez, Javier J.; Torres, José L.

doi:10.1007/s11127-010-9705-7

Cited by 35 publications

(46 citation statements)

References 51 publications

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“…On related grounds, a strand of the literature looks at the "politicians' pay gap" (see in particular Peichl et al (2013), for the case of Germany). 4 See for instance Holm-Hadulla F et al (2010) Fernández-de-Córdoba et al (2012) or Kollintzas et al (2015). On related grounds, on the appropriation of resources by the bureaucracy in the form of higher wages, see Marconi et al (2009).…”

Section: Endnotesmentioning

confidence: 99%

“…12 See, for instance, Caponi (2014). 13 See the stylized facts presented by Fernández-de-Córdoba et al (2012) and Kollintzas et al (2015). 14 According to ESA 2010, the general government sector consists of "institutional units which are nonmarket producers whose output is intended for individual and collective consumption, and are financed by compulsory payments made by units belonging to other sectors, and institutional units principally engaged in the redistribution of national income and wealth. "…”

Section: Endnotesmentioning

confidence: 99%

“…(1). 27 We also tried running these specifications exploiting the panel structure of EU-SILC (2004-2012 with country fixed effects and with/without a lag of the public pay gap. These regressions did not deliver meaningful estimates, probably due to the fact that changes in the structural characteristics of the public labor force take some time to be reflected on the public pay gap.…”

Section: Endnotesmentioning

confidence: 99%

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Understanding the public sector pay gap

et al. 2017

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We uncover the short-and long-run structural determinants of the existing cross-country heterogeneity in public-private pay differentials for a broad set of OECD countries. We explore micro data (EU-SILC, 2004-2012 and macro data . Three results stand out. First, when looking at pay gaps based on individual data, more than half of the cross-sectional variation of the sample can be accounted for by the degree of exposure to international competition, as well as by the size of the public sector labor force and its composition (i.e., the intensity in the provision of pure public goods), while labor market institutions play a very limited role. Second, we find that in some countries, pay gaps have narrowed down significantly during the recent financial crisis, this decrease being explained by the widespread process of fiscal consolidation rather than by changes in the previous factors. Third, we show that in the log run, openness to international trade and improvements in the institutional quality of governments are associated with decreases in the public-private wage gap. Our findings can be rationalized by a body of research stressing noncompetitive wage settlements in the public sector. JEL Classification: J31, J45, H50

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Section: Endnotesmentioning

confidence: 99%

Section: Endnotesmentioning

confidence: 99%

Section: Endnotesmentioning

confidence: 99%

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Understanding the public sector pay gap

et al. 2017

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“…Fernandez‐de‐Cordoba et al . (, ) were the first to develop a dynamic stochastic general equilibrium (DSGE) model, with public and private wages being determined in different environments. The private sector wage is determined within a competitive market framework, while the public sector wage is an optimal solution to the union's optimization problem.…”

Section: Introductionmentioning

confidence: 99%

“…In addition, the impulse response analysis in Fernandez‐de‐Cordoba et al . (, ) generates pro‐cyclical public wage and hours. Another important finding is the positive comovement between the two wage rates, and public and private hours.…”

Section: Introductionmentioning

confidence: 99%

Macroeconomic Effects of Public‐Sector Unions

Vasilev

2015

Labour

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www.econstor.eu Macroeconomic effects of public-sector unionsAleksandar Vasilev * January 6, 2015 AbstractMotivated by the highly-unionized public sectors, the high public shares in total employment, and the public-sector wage premia observed in Europe, this paper examines the importance of public-sector unions for macroeconomic theory. The model generates cyclical behavior in hours and wages that is consistent with data behavior in an economy with highly-unionized public sector, namely Germany during the period 1970-2007. The union model is an improvement over a model with exogenous public employment. In addition, endogenously-determined public wage and hours add to the distortionary effect of contractionary tax reforms by generating greater tax rate changes, thus producing higher welfare losses.

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