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Title: | Beaches, sunshine, and public-sector pay: theory and evidence on amenities and rent extraction by government workers |
Author: | Brueckner, Jan K. Neumark, David |
Keywords: | Igualtat retributiva Sector públic Variables (Matemàtica) Pay equity Public sector Variables (Mathematics) |
Issue Date: | 2011 |
Publisher: | Institut d’Economia de Barcelona |
Series/Report no: | [WP E-IEB11/42] |
Abstract: | The absence of a competitive market and the presence and strength of public-sector labor unions make it likely that public-sector pay reflects an element of rent extraction by government workers. In this paper, we test a specific hypothesis that connects such rent extraction to the level of local amenities. Specifically, although migration of taxpayers limits the extent of rent-seeking, public-sector workers may be able to extract higher rents in regions where high amenities mute the migration response. We develop a theoretical model that predicts such a link between public-sector wage differentials and local amenities, and we test the model’s predictions by analyzing variation in these wage differentials and amenities across states. The evidence reveals that public-sector wage differentials are, in fact, larger in the presence of high amenities, with the effect being stronger for unionized public-sector workers, who are likely better able to exercise political power in extracting rents. |
Note: | Reproducció del document publicat a: http://www.ieb.ub.edu/2012022157/ieb/ultimes-publicacions |
It is part of: | IEB Working Paper 2011/42 |
URI: | http://hdl.handle.net/2445/116595 |
Appears in Collections: | IEB (Institut d’Economia de Barcelona) – Working Papers |
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IEB11-42_Brueckner.pdf | 352.97 kB | Adobe PDF | View/Open |
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