ESSAYS ON WAGE DETERMINATION IN THE PUBLIC AND PRIVATE SECTORS

This dissertation examines the wage structure in the public and private sectors. The first chapter estimates the differential in wages and fringe benefits between company-owned and franchisee-owned fast food restaurants. The maintained assumption is that compared to franchisees, managers of company-owned restaurants have an agency problem when it comes to monitoring and supervising their employees. Empirical analysis of two data sets finds that labor compensation for nonmanagement employees is about 4% greater at company-owned restaurants. Wages for assistant managers and shift managers start at about the same level in both company-owned and franchised restaurants, but grow much more rapidly at company-owned restaurants. After two years, for instance, assistant and shift managers' wages are 6% greater at company-owned restaurants. In addition, results indicate that company-owned stores have a slightly lower quit rate and fewer job vacancies than franchisee-owned restaurants. These findings are consistent with the monitoring efficiency wage model as well as with a rent sharing model.The final chapter uses two approaches to compare public and private sector pay. The first approach is to use longitudinal data to compare the wage growth of workers who move between the public and private sectors. The second approach compares the average number of applicants for federal jobs to the average number of applicants for private sector jobs. The results of both methods are consistent with the conclusion that for the average worker wages in the federal government exceed wages in the private sector.The focus of the next two papers shifts to the public sector. The second chapter examines the determinants of the number of outside applicants for federal jobs using a variety of time series, cross-section and panel data sets. The main findings are that the application rate increases as the federal/private sector earnings differential increases, and that the application rate appears to behave procyclically. Furthermore, the results show that an increase in the federal/private sector earnings differential is associated with an increase in the average quality of applicants for federal jobs.