Public Sector Rationing and Private Sector Selection

We study the interaction between nonprice public rationing and prices in the private market. Under a limited budget, the public supplier uses a rationing policy. A private firm may supply the good to those consumers who are rationed by the public system. Consumers have different amounts of wealth, and costs of providing the good to them vary. We consider two regimes. First, the public supplier observes consumers’ wealth information; second, the public supplier observes both wealth and cost information. The public supplier chooses a rationing policy, and, simultaneously, the private firm, observing only cost but not wealth information, chooses a pricing policy. In the first regime, there is a continuum of equilibria. The Pareto dominant equilibrium is a means‐test equilibrium: poor consumers are supplied while rich consumers are rationed. Prices in the private market increase with the budget. In the second regime, there is a unique equilibrium. This exhibits a cost‐effectiveness rationing rule; consumers are supplied if and only if their cost–benefit ratios are low. Prices in the private market do not change with the budget. Equilibrium consumer utility is higher in the cost‐effectiveness equilibrium than the means‐test equilibrium.     

Australian Public and Private Capital Formation, 1901–75*

We present new estimates of Australian public capital formation as a reasonably consistent time series for 1901 to 1975 and comment on some issues they raise. The series is disaggregated by level of government and by function and separates public enterprises from other junctions. Primarily because we recognize internal funding of capital formation by public enterprises the new estimates differ quite radically from existing estimates. After 1930 the government share of total capital formation declined from a traditional average of one half to less than 40 per cent. Associated with this relative restraint since the early 1950s were an increasingly ‘business-like’ management of public enterprise and a growing pressure on the private sector to provide additional infra-structure.     

Public–Private Sector Wage Differentials in Australia

This paper examines public–private sector wage differentials in Australia. After controlling for observed characteristics and individual fixed effects, we show that on average workers in the public sector earn about 5.1 per cent more in hourly wages than those in the private sector. The wage premium is slightly higher for females than males. Using a panel data quantile regression model with fixed effects, we show that the positive wage effects of public sector employment are heterogeneous, with comparatively larger impact at the lower end of the wage distribution than at other parts. We also find evidence of heterogeneity in the public sector wage premiums by qualification, time period, occupation and state/territory.     

Risk Aversion and Sorting into Public Sector Employment

Abstract. This research note uses two German datasets – the large‐scale German Socioeconomic Panel and unique data from own student questionnaires – to analyse the relationship between risk aversion and the choice for public sector employment. Main results are (1) more risk‐averse individuals sort into public sector employment, (2) the impact of career‐specific and unemployment risk attitudes is larger than the impact of general risk attitudes and (3) risk taking is rewarded with higher wages in the private but not in the public sector.     

A Short-Run Employment Function for Australia: 1911–12 to 1938–39

This paper develops a short-run employment function model in which the speed of adjustment is positively related to the level of unemployment. The model is fitted to aggregate Australian data for the period 1911–12 to 1938–39, a period which includes the high unemployment years of the 1930s. Full information maximum-likelihood estimation procedures are used and a log-likelihood ratio test indicates that the variable speed of adjustment model is to be preferred to a fixed adjustment speed model. The speed of adjustment was quite sensitive to the unemployment rate. The policy conclusion of the paper is that if Australian unemployment rates rise to levels that are unprecedented in the post-war period, firms may shake out surplus labour at a surprisingly fast rate.     

Are Private Sector Consumption Decisions Affected by Public Sector Consumption?

This paper looks at the interaction between public and private consumption in Australia. The results show that there is a long-run equilibrium relation between private and public consumption. However, the nature of this relation changed during the 1980s from one of complementarity to one of substitutability.     

The Employment Effects of Gender Discrimination in Australia 1994–95

Interpreting the unexplained component of the gender wage gap as indicative of discrimination, the empirical literature to date has tended to ignore the potential impact wage discrimination may have on employment. Clearly, employment effects will arise if discrimination lowers the female offered wage and the labour supply curve is upward sloping. The empirical analysis employs the ABS Income Distribution Survey 1994–95 and finds evidence of both wage and associated employment effects. The analysis is replicated for the earlier period 1989–90. A comparison across time is of interest given the substantial deregulation of the Australian labour market over the period.     

Fiscal Decentralization and Public Sector Size in Australia*

This paper examines the impact of fiscal decentralization and intergovernmental collusion, and the resulting fiscal dependence, on the size of the public sector in Australia. Contrary to evidence for the United States, fiscal decentralization is found to have no impact on public sector size in Australia. Three possible explanations for this finding were suggested the relatively small number of lower-level governments; the economic insignificance of local governments; and the relative immobility of citizens. Fiscal dependence of State governments on the Commonwealth proves a significant determinant of public sector size, consistent with findings for the United States.     

A Reappraisal of the Virtues of Private Sector Employment Programmes*

This paper evaluates the employment effects of active labour market programmes for Danish welfare benefit recipients, focusing on private sector employment (PSE) programmes. Using a latent variable model that allows for heterogeneous treatment effects among observationally identical persons, we estimate commonly defined mean treatment effects and the distribution of treatment effects. We find no significant mean treatment effect of PSE programme participation as compared to participation in other programmes for PSE programme participants. However, we find substantial heterogeneity in the treatment effects, and those most likely to participate in PSE programmes are those who benefit the least from such programmes.     

Transfer and Life-cycle Wealth in Japan, 1974–1984

In this paper I use the cumulation-of-life-cycle saving method to measure the contribution of transfers to total wealth accumulation over the 1974 to 1984 period among worker households in Japan. I find that under either the Modigliani or Kotlikoff and Summers definitions of transfer wealth, capital accumulation for these households is largely the result of life-cycle saving. This study differs from earlier papers on this topic, which drew similar conclusions, by its close application of the two definitions of transfer wealth and by its extensive use of simulation analysis.
JEL Classification Numbers: D12 D91 E21     

Public Sector Employment,Wage Inequality and the Gender Pay Ratio in the UK

This paper assesses the relative contributions of the different systems of pay determination in the private sector and the public sector toward the changing level of wage inequality and the gender pay ratio in the UK. The greater centralisation of pay arrangements in the public sector compared with the private sector in the UK suggests that public sector employment may have acted to offset the widening wage inequality seen in recent years, as well as making an important contribution to the increase in women's relative average earnings compared to men. This issue is addressed by drawing on unpublished occupational hourly earnings data from the New Earnings Survey and applying decomposition of the Theil index of wage inequality to analyse both static and dynamic trends. The change in wage inequality for the period 1986 to 1995 primarily reflected the change in wage dispersion within the private sector, and the narrowing of the gender pay gap among the public sector workforce was an important factor in explaining the overall improvement in women's relative earnings. The paper argues that the relatively centralised pay arrangements in the public sector, compared with the private sector, played an important role in slowing the increase in wage inequality and narrowing the gender pay gap. As such, future policies to decentralise pay determination in the UK public sector may exacerbate the increasing level of wage inequality and reverse women's recent relative pay improvements.     

The Welfare and Employment Effects of Centralized Public Sector Wage Bargaining

In many countries, the government pays almost identical nominal wages to workers living in regions with notable economic disparities. By developing a two‐region general equilibrium model with endogenous migration and search frictions in the labor market, I study the differences in terms of unemployment, real wages, and welfare between a regional wage bargaining process and a national one in the public sector. Adopting the latter makes residents in the poorer region better off and residents of the richer region worse off. Private sector employment decreases in the poorer region and it increases in the richer one. Under some conditions, the unemployment rate in the poorer region soars.     

Substitution Between Private and Public Consumption in Australia*

Large increases in the private sector's savings ratio during a period of rapid growth in the relative size of the public sector has led to the suggestion that substitution between private and public consumption may be an important fcature of the Australian economy (Clements 1979). In this paper, empirical estimates are presented which indicate that no such substitution exists The estimates are derived from a theoretical model of consumption which is based on inter-temporal optimization in a stochastic environment. The estimates also suggest that private sector consumption behaviour is consistent with the joint hypothesis of rational expectations and Ricardian equivalence     

中国公共部门劳动生产效率实证研究

借鉴Karras(2007)的实证模型,本文利用中国1988-2007年30个省、市、自治区的面板数据,对公共部门的劳动生产效率进行实证分析,结果显示:(1)中国公共部门的劳动产出弹性为0.008;(2)中国公共部门的劳动边际产出高于非公共部门;(3)中国公共部门劳动人员的显性工资存在低估。虽然中国公共部门的劳动边际产出相对于非公共部门高,但其产出弹性仍处于较低水平。本文的政策含义是:加大劳动密集型公共品供给力度,有利于提高中国整个经济的产出水平;中国非公共部门需要改变劳动力粗放投入模式,地方政府应鼓励私人部门为员工提供多元化的职业培训与技能教育,以提高其边际产出。同时,优化公务员薪酬结构,将隐性收入逐步纳入正规货币工资范围之中。     

Adverse Selection and the Decline in Private Health Insurance Coverage in Australia: 1989–95

The decline in private health insurance coverage over the period 1989–95 is analysed using the ABS National Health Surveys. Individuals' health status and health risk behaviours are found to be significant determinants of their decision to purchase private health insurance. At a point in time, the pool of the insured is very heterogeneous, with a mix of both good and bad health risks. It is found that the decline in insurance coverage over the period 1989–95 coincided with an increase in the degree of 'adverse selection' within the insured population.     

Effects of Public Infrastructure on Cost Structure and Productivity in the Private Sector

This paper examines the effects of public infrastructure on the cost structure and productivity in the private sector in Australia. Translog cost functions incorporating public capital infrastructure are estimated for the aggregate private sector as well as for seven broad industry groups using annual time series data for 1968/69–1995/96. The effects of public infrastructure on productivity are measured in terms of both cost-saving and output-augmenting measures. The empirical results suggest that public infrastructure has a positive and significant impact on productivity in private sector industries. Public capital serves as a substitute for both private capital and labour. The rates of return to public capital are significant and vary over the sample period.     

Public Sector Employment and the Skill Premium: Sweden versus the United States 1970–2012

Swedish census data and tax records reveal an astonishing decline in the aggregate skill premium of 30 percent between 1970 and 1990, with only a modest recovery in the next couple of decades. In contrast, the US skill premium rose by around 24 percent over those four decades. A theory that equalizes wages with marginal products can rationalize these disparate outcomes when we replace commonly used measures of total labor supplies by private sector employment. The dramatic decline in the skill premium in Sweden is the result of an expanding public sector that has disproportionately hired unskilled labor.     

Structural Deficits and Fiscal Policy Stance in Australia, 1966–67 to 1988–89

This study adjusts the total deficit (or net public sector borrowing requirement) of the whole of the public sector in Australia for the effects of changes in both the level of economic activity and the implicit tax that inflation imposes on the holders of government bonds. Both adjustments are important, even when looking at year-to-year changes in the structural deficit. When the stance of fiscal policy is measured by the structural deficit as a percentage of gross domestic product, four years stand out as years of major changes. In each of the years 1973-74, 1979-80 and 1987-88 the stance of fiscal policy was substantially tightened with the abrupt tightening in 1979-80 being the largest change, though not much larger than that in 1973-74. By far the biggest change relaxing the stance of fiscal policy was in 1983-84, and the change in this year was the biggest of any change in either direction in the period.