Full Citation

Title: Are State Workers Overpaid? Survey Evidence from Liquor Privatization in Washington State

Citation Type: Journal Article

Publication Year: 2014

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Abstract: Industry privatizations that result in exogenous job displacement of public employees can be exploited to estimate public sector wage rents. I report the findings of an original survey I administered to examine how wages of displaced government workers were affected by a 2012 privatization of liquor retailing in Washington State. Based on a panel difference-in-differences estimator I find that privatization reduced wages by $2.51 per hour or 17 percent compared to a counterfactual group of nearly identical non-displaced workers, with larger effects for women. I decompose wage losses into three rents identified in the literature: public sector rents, union premiums, and industry-specific human capital. Public sector wage premiums separately account for 85 to 90 percent of overall wage losses, while union premiums and industry-specific human capital account for just 10 to 15 percent. The results are consistent with a roughly 16 percent public sector wage premium.

Url: https://link.springer.com/article/10.1007/s12122-015-9212-1

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Authors: Chamberlain, Andrew

Periodical (Full): Journal of Labor Research

Issue: 4

Volume: 36

Pages: 347–388

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

Countries: United States