Cross-Country Evidence on Public Sector Retrenchment |
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| Authors: | Haltiwanger John; Singh Manisha |
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| Institution: | John Haltiwanger and Manisha Singh are with the Department of Economics at the University of Maryland. This is the revised version of a paper presented at the World Bank conference on Public Sector Retrenchment and Efficient Compensation Schemes held in November 1996. The authors are grateful to many officials at the World Bank for providing data and their time for extensive interviews on specific public sector retrenchment programs. They thank participants at an informal seminar held at the World Bank in January 1996, participants at the conference in November, Martin Rama, Peter Fallon, and the anonymous referees for helpful comments. Catherine Buffington and Andrew Figura provided excellent research assistance. |
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| Abstract: | This article reports the results from a survey of public sectoremployment retrench-ment episodes across a wide variety of developingand transition economies. The information collected and analyzedis primarily from internal World Bank documents and in-depthinterviews with World Bank staff having operational informationabout experiences in specific countries. Using the informationcollected on 41 retrenchment programs across 37 countries, thearticle analyzes the relationships between the factors leadingto retrenchment, the scope and nature of retrenchment, and themethods used to accomplish the retrenchment. The discussionof methods includes an analysis of the mix of involuntary andvoluntary employment reduction programs, the compensation schemesoffered, and the extent of targeting of specific types of workers.Although relevant quantitative information is limited, the articlealso attempts to evaluate the outcome of the programs on severaldimensions. The most striking findings relate to analysis ofthe factors leading a significant fraction of programs to rehireworkers separated from the public sector (thereby defeatingthe programs'objective). In addition, the article relates programcharacteristics to calculated summary financial payback indicatorsand to the nature of the labor market adjustment. |
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