Congresos y reuniones científicas
Fiscal Transfers, Regional Labour Market and Economic Convergence,
Congreso; Reunión Anual AAEP (Mendoza); 2009
Institución organizadora:
Asoc. Argentina de Ec. Política
This paper examines the relationship between federal transfers and the existence of awage premium for the public sector relative to the private sector in Argentina. Using theoreticalinsights from two related literatures, we provide a simple conceptual framework aimedat specifying the basic relations and to motivate the econometric model. Our results suggestthat the public sector pays a wage premium relative to the wages paid by the privatesector. This premium is increasing in the level of per capita federal transfers. We also findno significant evidence suggesting that federal transfers have an effect on wages in the privatemanufacturing sector at the aggregate level. However, there is some evidence as toa significant positive relationship between federal transfers and wages paid to workers withless formal education; for jobs requiring a technical or professional qualification the relationshipbetween wages and federal transfers is negative and significant. These results broadlysupport our hypothesis that the private sector faces harder competition in the labour marketin provinces which receive larger transfers from the central government