WPS/98.20 pdf
Taye Mengistae
Wage rates and job queues: does the public sector overpay in Ethiopia?

ABSTRACT: In this paper I extend Lee's two-stage structural probit analysis in order to test and measure the existence and scope of a public sector job queue in Ethiopia. Recent urban household survey data reject the absence of job rationing in favour of an implicit queue of most private sector workers for public sector jobs. The queue is mainly due to the expectation of high public sector wage premiums. Controlling for individual differences in the expected sectoral wage differential, I find that skill is not a significant influence on the sector preference of a worker. Parental employment background and gender are. Public sector employers are cost mininmising agents in selecting from the queue: for a given wage rate, more skilled workers are more likely to be selected while, other things being equal, workers on the lower end of the public sector pay scale also have a greater chance of being selected.

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SFS 11 December 1998