Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216354 
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13042
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
The size of the public sector in terms of employment and compensation has a strong life-cycle dimension. We establish a quantitative partial-equilibrium life-cycle model with incomplete markets, private and public sectors, and risk-averse workers, and use it to (i) calculate three dimensions of public-sector compensation: wage, pension, and job-security premia, and (ii) quantify the effects of harmonizing the compensation in the two sectors. We find that the job-security and pension's premia are important forms of compensation to public-sector workers. Harmonizing the characteristics of public employment with those of the private sector would lower the unemployment rate and reduce government costs.
Subjects: 
public-sector employment
public-sector wages
life cycle
unemployment
retirement
pensions
job security
JEL: 
J45
E24
H30
H55
Document Type: 
Working Paper

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