Brueckner, Jan K.Neumark, David2017-10-132017-10-132011https://hdl.handle.net/2445/116595The 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.52 p.application/pdfengcc-by-nc-nd, (c) Brueckner et al., 2011http://creativecommons.org/licenses/by-nc-nd/3.0/es/Igualtat retributivaSector públicVariables (Matemàtica)Pay equityPublic sectorVariables (Mathematics)info:eu-repo/semantics/workingPaperinfo:eu-repo/semantics/openAccess