Interactions between Private and Public Sector Wages

By António Afonso, Pedro Gomes. Social Science Research Network, 2014

133 citations recorded by the source corpus.

We analyse the interactions between public and private sector wages per employee in OECD countries. We motivate the analysis with a dynamic labour market equilibrium model with search and matching frictions to study the effects of public sector employment and wages on the labour market, particularly on private sector wages. Our empirical evidence shows that the growth of public sector wages and of public sector employment positively affects the growth of private sector wages. Moreover, total factor productivity, the unemployment rate, hours per worker, and inflation, are also important determinants of private sector wage growth. With respect to public sector wage growth, we find that, in addition to some market related variables, it is also influenced by fiscal conditions.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/387c394172534fef64d9866ee760e50d5c93f9aa

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. Nikolai Stähler
2. Carlos Thomas

Citations in the corpus

• FiMod - a DSGE Model for Fiscal Policy Simulations (2012, methodology): “In this sense, the matching process differs slightly from other papers incorporating public employment in a matching framework (as, for example, Quadrini and Trigari, 2007; Afonso and Gomes, 2008; or Gomes, 2009).”
• Public and private sector wages interactions in a general equilibrium model (2010, unknown): “(2008), Afonso and Gomes (2008) and Pappa (2009), and the theoretical results of Ardagna (2007).”