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In many countries, the structure of wages and the labor law legislation are completely different for public and private sector employees. In this paper, we develop a general equilibrium overlapping generations model to study the effect of such differences on household savings and labor supply. To conduct our analysis, first we use microdata from two Brazilian household surveys to document that civil servants save and work significantly less than their counterparts in the private sector. Second, we use matched employer–employee microdata from Brazil (RAIS) to document differences between the two sectors in terms of wage and unemployment risk. Then, we calibrate the model to be consistent with micro and macro evidence for Brazil. Our counterfactual exercises show that differences in wages characteristics and labor law legislation account for nearly 70% of the gap in savings between civil servants and private sector workers, and 57% of the gap in labor supply. In addition, we find that eliminating those differences can produce sizable increase on aggregate savings, employment, and welfare.

Using information from all International Monetary Fund conditionality programmes from 1990 to 2018, we implement a dynamic Augmented Inverse Probability Weighting Regression Adjustment approach to enquire whether public-sector employment retrenchment may be incompatible with the goal of shrinking the informal economy. The estimated effect 5 years after the policy intervention indicates an increase in the share of the shadow economy to GDP by about 1.3 percentage points. More importantly, this change involves a sizable reallocation of private economic activity from its formal to its informal part; that is, the size of the formal private sector relative to the size of the informal sector decreases by seven percentage points. We interpret these findings through a two-sector model in which there is interdependence between worker incomes and the allocation of product demand across the formal and informal sectors.

What effects do International Monetary Fund (IMF) loans have on borrowing countries? Even after decades of research, no consensus exists. We offer a straightforward explanation for the seemingly mixed effects of IMF loans. We argue that different loans have different effects because of the varied conditions attached to IMF financing. To demonstrate this point, we investigate IMF loans with and without conditions that require public sector reforms in exchange for financing. We find that the addition of a public sector reform condition to a country’s IMF program significantly reduces government spending on the public sector wage bill. This evidence suggest that conditions are a key mechanism linking IMF lending to policy outcomes. Although IMF loans with public sector conditions prompt cuts to the wage bill in the short-term, these cuts do not persist in the longer-term. Borrowers backslide on internationally mandated spending cuts in response to domestic political pressures.

A decade before the COVID-19 pandemic, the United States (US) federal government was working to create flexible work environments for employees under the 2010 Telework Enhancement Act. Given this reality and the growing desire for greater flexibility of workers inspired by the “Great Resignation” during the pandemic, the US federal government appears to have recovered lost employees faster than other levels of the public sector. Still, given that federal workers skew older with less than a tenth of the workforce being under age 30 years and nearly a third reaching retirement age, a true crisis still looms in our administrative state. Using the 2021 Federal Employee Viewpoint Survey Data, we analyze what factors predict turnover intention post-pandemic, focusing the analysis on teleworking and other workplace flexibility policies. We use the findings to make recommendations to help increase employee recruitment and retention within the US federal government.

This paper revisits, by means of both time series and panel data analyses, the empirical regularity identified by Okun’s (in: Proceedings of the business and economics statistics section, American Statistical Association, Washington, DC, 98–103, 1962) seminal paper. Based on a sample of 85 advanced and developing economies between 1978 and 2014, we confirm the existence of an average negative and statistically significant Okun’s relationship. At the same time, results suggest that the relation varies substantially across countries and times. Finally, we identify several factors affecting the variation in Okun’s coefficient across and within countries. Across countries, the relationship is stronger in countries with higher average unemployment, a larger share of public employment, lower informality and smaller agricultural sectors, and one that is more diversified. Within countries, in addition to some of these factors, we find that deregulation in labor and product markets and recessions have strengthened the response of unemployment to the business cycle.

In this study, we investigate how structural economic changes constrain an equality project, the public-sector expansion strategy. First, we describe a three-stage process in which a growing productivity gap between the private-manufacturing and public-service sectors disrupts traditional class solidarity. We contend that emerging conflicts between private and public sectors due to public-sector expansion and a growing inter-sectoral productivity gap eventually lead to employment and budget crises, as well as the weakening of coordinated wage-setting institutions. Furthermore, political, institutional, and economic transformations originating from sectoral cleavages and imbalance lead to increased income inequality. We test this argument using an unbalanced panel dataset on 16 advanced industrial democracies from 1971 to 2003. We find that public-sector employment has a strong negative effect on income inequality when the productivity gap between sectors is low. In such situations, public-sector employment fulfills its promise of equality and full employment. However, as the inter-sectoral productivity gap increases, the negative effect of public-sector expansion on income inequality evaporates. The findings suggest that severely uneven productivity gaps due to different degrees of technological innovations significantly weaken and limit the effectiveness of left-wing governments' policy interventions through public-service expansion.

This article compares pre-entry and post-entry personal values, job motivations, sector perceptions, and career preferences of two cohorts of professional Master of Public Administration (MPA) students in Asia. The study triangulates data from surveys, focus groups, and exit interviews in a quasi-experimental setting. On the one hand, findings confirm that MPA programs attract students whose job motivations and sector perceptions are already skewed toward the public sector, particularly those enrolling directly from the public sector. On the other hand, overall appreciation of values associated with and preference for public sector employment goes down during the program, while preference for private sector employment goes up. Students with pre-enrollment public sector careers, however, have significantly higher levels of public service motivation at the moment of graduation than those with pre-enrollment careers outside government. The article concludes with implications of these findings for the study and practice of public administration education.

Tunisians are striving for the opportunity to realize their potential and aspirations in a country that is rich in both human and physical capital, but whose recent economic growth has failed to create enough opportunities in the form of good and productive jobs. This report highlights the main barriers that hinder the Tunisian labor market from providing income, protection, and prosperity to its citizens and proposes a set of labor policies that could facilitate the creation of better, more inclusive, and more productive jobs. The weak economic performance and insufficient and low-quality job creation in Tunisia is primarily the result of an economic environment permeated by distortions, barriers to competition, and excessive red tape, including in the labor market. This has resulted in the creation of a insufficient number of jobs, especially in the formal sector. To change this situation, policy makers need to address five strategic directives that can promote long-term inclusive growth and formality: foster competition; realign incentives, pay, and benefit packages in the public sector; move toward labor regulations that promote labor mobility and provide support to workers in periods of transition; enhance the productivity of informal workers through training and skills building; and reform existing social insurance systems and introduce new instruments to attain broader coverage.

Using three waves of survey data from fishing villages in Aceh, Indonesia for 2005–09, we examine the determinants of local volunteer labor after the tsunami. Volunteer labor is the village public sector labor force for maintenance, clean-up and renovation of public capital. While also examining the effects on volunteerism of village destruction and trauma, pre-existing social capital, diversity, and aid delivery, we focus on effects of democratization. The tsunami and massive international aid effort prompted the settlement of the insurgency movement in Aceh, which had led to suspension of local elections over the prior twenty or more years. Until 2006, village heads who call volunteer days were effectively selected by village elites, who may highly value the public facilities maintained by volunteer labor. With elections, volunteer days fall under the new regime, with democratically elected village heads calling fewer volunteer days, which may appeal more to the typical villager. Identification comes from pseudo-randomized differential timing of elections.

Bolivia's informal economic sector is the largest in Latin America and has been attributed to many factors including the burden of regulations, the weakness of public institutions, and the lack of perceived benefits to formality. 'Increasing Formality and Productivity of Bolivian Firms' presents fresh qualitative and quantitative analyses to help understand the reasons why firms are informal and the impact of formalization on their profitability, in order to better inform appropriate policies. A crucial finding of the study is that the impact of tax registration on profitability depends on firm size and the ability to issue tax receipts. The smallest and largest firms have lower profits as a result of tax registration because their cost of formalizing exceeds benefits. The study concludes by recommending policy priorities to increase the benefits of formalization through information, training, access to credit and markets, and business support. Longer-term policy recommendations include simplifying formalization, regulatory, and taxation procedures and reducing their costs, as well as measures to boost the productivity of small and micro firms.