2011年-世界发展银行全球_Higher_Wages_Lower_Pay___Public_vs_Private_Sector_Compensation_in_Peru_28页_1mb

Summary of "Higher Wages, Lower Pay: Public vs. Private Sector Compensation in Peru"

Core Content

This paper investigates wage differentials between the public and formal private sectors in Peru using data from the 2009 Encuesta Nacional de Hogares (ENAHO). The study aims to inform evidence-based policy discussions on civil service reform, particularly in the context of Peru's ongoing efforts to modernize public administration.

Main Points

• Wage Differentials: The paper finds that when only monetary wages are considered, public sector employees earn higher wages than those in the formal private sector. However, when including in-kind payments and bonuses, the formal private sector has a higher total compensation.
• Compensation Components: The analysis emphasizes the importance of considering non-monetary forms of compensation (in-kind benefits and bonuses) in assessing overall pay levels, as they significantly affect the comparison.
• Selection Bias: The study accounts for selection bias by estimating separate wage functions for the public and formal private sectors and incorporating the inverse Mills ratio, derived from a probit model, to adjust for the non-random selection of workers into different sectors.
• Oaxaca-Blinder Decomposition: The results are decomposed using the Oaxaca-Blinder method to distinguish between the explained and unexplained parts of the wage differential. The unexplained part is considered to be potentially due to discrimination or unobserved factors.
• Education and Characteristics: The paper highlights that public sector employees tend to have higher levels of education and are more likely to be married and female. These characteristics contribute to higher wages in the public sector.
• Informality in the Private Sector: A significant portion of private sector workers are in informal employment, which is associated with lower wages. The analysis focuses on formal private sector workers to ensure a more accurate comparison.
• Empirical Approach: Three estimation methods are used: (1) a single equation with a public sector dummy, (2) two separate wage equations for public and formal private sectors, and (3) a selection-corrected model that accounts for non-random sorting of workers between sectors.

Key Information

Data Overview

• Source: Encuesta Nacional de Hogares (ENAHO) 2009.
• Sample Size: 15,613 employees, including 3,670 in the public sector and 11,943 in the private sector (4,032 formal private sector workers).
• Variables Considered: Education level, age, gender, marital status, and urban/rural location.
• Compensation Measures: Includes monetary wages, in-kind benefits, and bonuses.

Findings

• Monetary Wages: Public sector hourly wages are 12% higher than formal private sector wages.
• Total Compensation: Formal private sector hourly compensation is 11% higher than that of the public sector when including in-kind benefits and bonuses.
• Education Impact: Higher education levels are associated with higher compensation, with public sector workers more likely to have completed post-secondary education.
• Selection Bias: A two-stage estimation method is used to correct for selection bias, with the first stage estimating the probability of working in the public or private sector.
• Oaxaca-Blinder Decomposition: The wage differential is decomposed into an explained part (due to differences in worker characteristics) and an unexplained part (possibly due to discrimination or unobserved factors). The unexplained part is not significant except for the sub-sample of employees with postgraduate degrees.

Methodology Highlights

• Mincerian Regression: Used to estimate the relationship between wages and worker characteristics.
• Probit Model: Estimated to understand the factors influencing the probability of working in the public or formal private sector.
• Inverse Mills Ratio: Incorporated into the wage equations to correct for selection bias.
• Oaxaca-Blinder Approach: Applied to decompose wage differentials into explained and unexplained components.

Conclusion

The study contributes to the understanding of public-private sector wage differentials in Peru by considering a broader definition of compensation that includes non-monetary benefits. It highlights the importance of controlling for selection bias and the role of education in explaining wage gaps. The findings suggest that while the public sector may offer higher monetary wages, the formal private sector provides higher total compensation, especially when accounting for bonuses and in-kind benefits. The analysis also indicates that the wage differential may be partially explained by differences in worker characteristics, with the unexplained part being more significant for those with postgraduate degrees.