Measuring Rents from Public Employment: Regression Discontinuity Evidence from Kenya

Public employees in many developing economies earn much higher wages than similar private-sector workers

From:
Foreign, Commonwealth & Development Office
Published
23 July 2018
Country:
Kenya
Document Type:
Working Paper
Theme:
Education
First published:
1 October 2017
Authors:
Burton, N, Bold, T and Sandefur, J

Abstract

Public employees in many developing economies earn much higher wages than similar聽private-sector workers. These wage premia may reflect an efficient return to effort or聽unobserved skills, or an inefficient rent causing labor misallocation. To distinguish these聽explanations, we exploit the Kenyan government鈥檚 algorithm for hiring 18,000 new teachers in 2010 in a regression discontinuity design. Fuzzy regression discontinuity聽estimates yield a civil-service wage premium of over 100 percent (not attributable to聽observed or unobserved skills), but no effect on motivation, suggesting rent-sharing as聽the most plausible explanation for the wage premium.

This work is part of the Department for International Development鈥檚 鈥楻esearch on Improving Systems of Education鈥� (RISE) Programme

Citation

Burton, N.; Bold, T.; Sandefur, J. Measuring Rents from Public Employment: Regression Discontinuity Evidence from Kenya. RISE Working Paper 17/015

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Published 23 July 2018
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