## Public-Private Wage Differentials and Interactions Across Countries and Time

_IMF Working Papers, March 17, 2023_

## Source details

**Canonical URL:** [Public-Private Wage Differentials and Interactions Across Countries and Time](https://www.imf.org/en/publications/wp/issues/2023/03/17/public-private-wage-differentials-and-interactions-across-countries-and-time-531080)

## Other formats

- [Markdown version](/en/publications/wp/issues/2023/03/17/public-private-wage-differentials-and-interactions-across-countries-and-time-531080/index.md)
- [Structured JSON version](/en/publications/wp/issues/2023/03/17/public-private-wage-differentials-and-interactions-across-countries-and-time-531080/index.json)
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## Bibliographic details
- Authors: Chadi Abdallah, David Coady, La-Bhus Fah Jirasavetakul
- Published: March 17, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400236853.001

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### Dataset and scope
- Compiled a novel database on average public and private sector wages and public-private wage differentials.
- Analysis covers variation by gender, skill level, over time, and the dynamic relationship between public and private wage levels and implications for inflation.

### Key empirical findings
- On average, public-sector workers earn around 10 percent more relative to comparable private sector workers.
- The public sector wage premium is higher for:
  - women
  - low-skilled workers
  - developing countries
- The average public sector wage premium varies counter-cyclically:
  - increases during economic downturns
  - increases prior to elections
- Both private sector wages and inflation respond positively to changes in public wages.
- There is significant heterogeneity in the effects across countries, reflecting differences in labor market characteristics and prevailing macroeconomic conditions.

### Analytical emphasis and themes
- Comparative analysis by gender and skill level to document differential premiums.
- Time-series analysis to identify cyclical and political-cycle patterns (economic downturns and pre-election periods).
- Examination of dynamic interactions between public wages, private wages, and inflation.

### Implications for policymakers
- Public wage setting can have spillovers to private sector wages and to inflation.
- Heterogeneous country effects imply policy responses should account for:
  - labor market characteristics
  - prevailing macroeconomic conditions
  - distributional impacts across gender and skill groups

*Source: Public-Private Wage Differentials and Interactions Across Countries and Time, Chadi Abdallah, David Coady, La-Bhus Fah Jirasavetakul, March 17, 2023.*

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## Content in this bundle

- **Working Paper**
  - [Working Paper (Markdown version)](/-/media/files/publications/wp/2023/english/wpiea2023064-print-pdf.pdf.md){rel="alternate" type="text/markdown"}
  - [Working Paper (PDF)](/-/media/files/publications/wp/2023/english/wpiea2023064-print-pdf.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2023/03/17/public-private-wage-differentials-and-interactions-across-countries-and-time-531080_