WAGE DETERMINATION IN THE PUBLIC SECTOR: A CRITICAL REVIEW OF THE LITERATURE

BETH WALTER HONADLE

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DOI: 10.2190/L5G9-R4WE-CR53-AFW7

Abstract

The wage determination literature suggests that, in general, economic and institutional factors influence public sector wages. There is little evidence to support the view that ordinarily - at most times, in most places, and at most levels of government - public employees wield such inordinate political power as to be able to "set" their own wages. This article critically reviews the empirical literature on public sector wage determination and finds that 1) the opportunity wage and 2) unionization and collective bargaining are key determinants of public employee wages. It also analyzes the limitations of existing wage determination studies.

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