Ravi Somani - Website
Primary: Applied Microeconomics, Development Economics
Secondary: Labour Economics
Paper title: 'Public-Sector Wages, Education choices and Productivity'
Abstract - The public sector is often the major employer of high-skilled labour. As such, its hiring polices determine the returns to education and distribution of skills across occupations. This impacts productivity in both the private sector and the public sector. I provide evidence for this in Ethiopia, where 58\% of all tertiary educated individuals work in the public sector, resembling many developing countries. I build a comprehensive new dataset on labour markets in Ethiopia, incorporating detailed information on public-sector workers, and exploit the rapid expansion of public universities during the 2000s. I use variation around distance and age-at-exposure for identification. I find that education attainment significantly increases after the expansion, but that the public wage premium mediates education choices. As the most able leave the private sector for higher education, and do not re-enter, private-sector productivity declines. Public-sector productivity increases. The empirical results are consistent with a model featuring costly search for public employment.
- Marcos Vera Hernandez
- Antonio Cabrales
- Fabien Postel-Vinay