Impact of the 2008 wage review on the public-private sector wage-gap in Cameroon

Abstract

This paper examines the impact of the 2008 wage review on the public-private sector wage-gap in Cameroon. Specifically, the paper evaluates the determinants of participating in the labour market and choosing formal sector employment; assesses the correlates of wages in the public and private sectors using the 2005 and 2010 Cameroon employment and informal sector surveys; and investigates the role of access to endowments and returns to endowments in explaining the public-private sector wage-gaps in 2005 and 2010. To achieve these objectives, the paper employs the bivariate probit model, Mincerian wage equations and the Neuman-Oaxaca decomposition approach. Results indicate that before and after the wage review, public sector workers enjoyed a wage premium over their formal private sector counterparts, more so after the review – registering an impact of 0.032 log points. Findings also reveal that the human capital variables – education and experience – solidly contributed in mitigating the public-private sector wage-gap. These results show that the 2008 wage review helped to augment the public sector wage premium in Cameroon over the period under study. These findings are useful inputs in animating public-private sector debates on human capital development and the structure of wages in developing country settings.