Public-Private Wage Differentials and the Quality of Government Workers in the Philippines

Abstract

This paper estimates the wage differential between public sector employees and their private sector counterparts in a developing country, the Philippines. It finds that public sector workers in this country are receiving an hourly wage premium over private sector employees of similar background. This wage premium is associated with a higher degree of pro-social behaviour among government workers relative to private sector workers. However, government employees are found to be working fewer hours than their counterparts in the private sector. College graduates are more likely to work in the government than non-college graduates but among college graduates, those with more specialized skills tend to be employed in the private sector rather than the public sector.