Public sector labor markets

This article focuses on the way public sector labour market contribute to public service provision, such as education, health care and other government services. We first describe the structure of public sector employment across several OECD countries and show that there is a large variation of public employment size and composition. Second, we discuss the role and functions of public sector employees distinguishing between “civil servants” (mostly administrators and functionaries, with special statute with several privileges, as well as more generous retirement benefits) and “frontline service providers” (such as, teachers, nurses, police, and garbage collectors) who often start their career with a temporary appointment and experience more uncertain prospects of advancement and earnings. Third, we discuss pay setting in the public and private sector comparing Europe and the US. We show that in Europe wages are higher in the public sector, while the opposite occurs in the US. This has important implications for the attractiveness and composition of public sector jobs: in Europe, public employees tend to be more educated and natives occupy a larger share; in the US, instead, non-white minorities occupy a larger share in the public sector. The structure of pay differentials along with the administrative rules that govern career advancement also influence the characteristics of public sector employees. We show that individuals with high intrinsic motivation and good social skills are more likely to be attracted by public sector jobs.