Abstract
This note reports propensity score matching estimates of the public sector pay premium in New Zealand for each year from 2003 until 2007. Comparing with observably similar private sector workers shows that public sector workers have received a pay premium that has grown in each year, from almost zero in 2003 to 22% in 2007. Unless there have been unmeasured changes in worker qualities or in the attributes of public sector jobs that give rise to compensating pay differentials, this rising public sector pay premium is most plausibly attributed to an increase in non-competitive rents.
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