TY  - JOUR
AU  - Freeman,Richard B.
TI  - How do Public Sector Wages and Employment Respond to Economic Conditions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1653
PY  - 1985
Y2  - June 1985
UR  - http://www.nber.org/papers/w1653
L1  - http://www.nber.org/papers/w1653.pdf
N1  - Author contact info:
Richard B. Freeman
NBER
1050 Massachusetts Avenue
Cambridge, MA  02138
Tel: 617/868-3900
Fax: 617/868-2742
E-Mail: freeman@nber.org
M1  - published as Richard B. Freeman. "How Do Public Sector Wages and Employment Respond to Economic Conditions?," in David A. Wise, ed., "Public Sector Payrolls" University of Chicago Press (1987)

AB  - This paper examines the changes over time in public sector wages and employment relative to private sector wages and employment using data from surveys of establishments and individuals. The paper finds that:(1) The pay of public sector workers relative to private sector workers varies greatly over time. Contrary to the view that public sector payis inflexible, variations in relative pay are due as much to fluctuations in public pay as to fluctuations in private pay.(2) The relatively high paid public sector worker of the early 1970s has within the span of a decade lost much of his or her advantage over otherwise comparable private sector workers, seriously denting if not destroying the picture of the 'overpaid' public employee which developed in the early 1970s.The group of public sector workers who tend to be most highly paid in the U.S. relative to private sector workers are blacks and women, suggesting that the public sector discriminates less than does the private sector.(3) Differentials in public and private sector pay vary greatly depending on the nature of comparisons, with for example Current Populations Survey comparisons of individuals with similar broad human capital showing federal employees to be higher paid than private employees and Bureau of Labor Statistics surveys of wage rates in particular occupations showing federal workers to be lower paid.(4) Public sector employment follows a very different pattern of change than private sector employment. It has smaller annual variation, and moves counter cyclically rather than cyclically. In terms of demographic composition the public sector employs relatively more blacks and women than the private sector.
ER  -