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Public-Sector Wage Premium in Poland

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Gabriela Grotkowska

This book assesses the size, structure and evolution of the public-private wage gap in Poland – a country frequently regarded as an example of a successful transition from a centrally planned economy to a market economy. The author extensively elaborates on the issue of the selection of employment, and reviews the available studies concerning the public-private wage gap in developed and developing countries, with a particular attention to the evolution of methodology. Furthermore, the author examines recent empirical studies on the public-sector wage premium. Contrary to former research, they have provided positive estimates of the average public-sector wage premium, with significant differences in terms of employee characteristics and local labour market conditions.

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Concluding remarks

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The public-sector wage premium in Poland is an interesting research issue for an economist a quarter of a century since the beginning of economic transition for several reasons.

First, there has been deficient research concerning the issue, particularly after 2004, i.e. focused on Polish accession to the European Union. Furthermore, it should have been expected that intensified migration, the liberalization of labour markets in Europe, structural adjustment and the inflow of capital would significantly affect the equilibrium between labour submarkets and the process of wage setting. The same period of time also exhibited the largest increase in the number of tertiary graduates entering the labour market in Poland, which significantly affected labour force supply, particularly in relation to certain fields of study. Since the public sector remains the main source of demand for work among individuals with the highest level of education, changes in the educational structure of the labour force in Poland were expected to impact relative wages between the public and private sectors.

Second, the available international studies offer an array of diverse methodological approaches leading to mixed and, to some extent, inconsistent findings. The early research papers on the Polish labour market were focused on utilizing single-equation methodology, which can limit the reliability and credibility of results. The research project, which findings have been presented in the present book, has attempted to apply various feasible methods, restricted by data availability, to confront and strengthen former conclusions. The research described in this...

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