Measuring Rents from Public Employment: Regression Discontinuity Evidence from Kenya - Working Paper 457

Author
Justin Sandefur, Tessa Bold, Nicholas Barton
Content Type
Working Paper
Institution
Center for Global Development
Abstract
Public employees in many developing economies earn much higher wages than similar private-sector workers. These wage premia may reflect an efficient return to effort or unobserved skills, or an inefficient rent causing labor misallocation. To distinguish these explanations, we exploit the Kenyan government’s algorithm for hiring eighteen-thousand new teachers in 2010 in a regression discontinuity design. Fuzzy regression discontinuity estimates yield a civil-service wage premium of over 100 percent (not attributable to observed or unobserved skills), but no effect on motivation, suggesting rent-sharing as the most plausible explanation for the wage premium.
Topic
Employment, Global Political Economy
Political Geography
Kenya