Individual and Organizational Determinants of Wage Disparities in Israel's Local Authorities

Abstract

In this study I compare hypotheses derived from a resource-based view of management with those based on an institutional perspective to test whether wage levels in local authorities are more likely to reflect technical or allocative efficiency measures, the former deriving from “autonomous” revenues from private sources, the latter from policy-based allocation of resources. A focus on wage variations for 5,033 employees from 83 local authorities shows that the level of autonomous revenues lowers the wages for women and Arab employees but not for men and Jewish employees. The results suggest that local authorities use a differential wage allocation, probably indicating increased access to privatized and outsourced employee recruitment. Moreover, the results show that equal opportunity notions, presumably inherent in social policy guidelines, do not ensure interorganizational homogeneity in wages: metropolitan and larger local authorities are more likely to use technical than institutional measures of organizational success. I conclude that neoinstitutional hypotheses that focus both on the competitive and institutional aspects of governance are differentially applied in regard to wages.