A Switching Regression Model for Wage Determinants in the Public and Private Sectors of a Developing Country

Exploring the public-private sector wage gap in European countries

“…10 A positive (negative) correlation suggests that an unobservable entering the Probit equation through the error term affects selection into the paid employee sample in the same (in the opposite) direction that it affects hourly wages through the error term in the wage equation. 11 The papers by Kanellopoulos (1997), Heitmueller (2006), Van der Gaag and Vijverberg (1988) and Glinskaya and Lokshin (2007), as well as those noted earlier, explore selection in to the public sector. 12 The OR decomposition with selection is discussed in Neuman and Oaxaca (2004):…”

“…Christofides and Pashardes (2002) use a Bivariate Probit to account for selection into sector (public, private) and type of employment (paid, self-employment) and then examine public-private wage gaps for paid employees. Other attempts to take account of selection into the public sector, or at least explain the incidence of employment by sector, include Anghel et al (2011), Glinskaya and Lokshin (2007), Heitmueller (2006), Kanellopoulos (1997), and Van der Gaag and Vijverberg (1988), to name but a few. Central to these efforts is the availability of instruments that explain the choice of sector but are not relevant to the wage determination process.…”

Selling on Farm or on the Market: What Kind of Arbitrage for Smallholders’ Farmers in South-Kivu, Democratic Republic of Congo?

“…For those who sell on the market on the other hand, it indicates that they would have a lower net gain than the one obtained while having sold on farm. This means that farmers selling on market/on farm have unobserved characteristics that allow them to earn more/less than the average farmers selling on market or on farm (Lee, 1978;Maddala, 1983;Van der Gaag and Vijverberg, 1988).…”

“…The decision to sell on farm or on the market is an important issue in rural areas that has attracted quite some attention in the literature (Fafchamps and Hill, 2005;Shilpi and Umali-Deininger, 2007;Vakis et al, 2003). This paper identifies empirically the incentives underlying this decision for a sample of South Kivu farmers, in order to outline policy measures likely to improve market participation.…”

“…In order to achieve its objectives, this paper takes as a methodological starting point the papers by Fafchamps and Hill (2005); Shilpi and Umali-Deininger (2007); Vakis et al (2003). These studies use either the tobit or the conditional maximum likelihood or the conditional logit for the data analysis.…”