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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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Chapter 2 Undertaking employment in the public sector in Poland

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The previous chapter provided evidence of the differences in the employment structure of the public and private sectors in Poland. The chapter also showed the internal duality of the public sector, which is related to noticeable differences among individuals employed in its market-based and non-market-based segments. These sectors differ from each other, with regard to not only employees’ qualification structure or their demographic characteristics, but also the features of job contracts or employment conditions. Many of these characteristics influence the balance between costs and benefits related to undertaking employment with a particular employer; together with the offered wage, they also determine the decision about whether to get employed. Furthermore, one can assume that this balance differs, depending on a particular person’s situation (their education profile, family situation, ambitions and life goals, where they live), as well as in terms of encouraging people to take up employment in the public (private) sector and discouraging them from it with a different strength.

These observations raise the question about the mechanism of undertaking employment in an entity belonging to a particular ownership sector. Does this characteristic of an employer matter to an employee? Is it only an employment attribute of minor importance? Conversely, when already at the stage of making decisions about education pathways and future employment, do young people consider the probability of working in the public or private sector? Does an employment sector influence the level of job satisfaction and thus employees’ motivation and productivity? This chapter...

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