On Selection into Public Civil Service

Bohm, Tobias and Riedel, Nadine (2011) On Selection into Public Civil Service. Centre for Business Taxation WP 11/09.

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Abstract

This paper investigates whether the institution of life time tenure for public sector employees affects the selection of workers into private and public sector occupation. Precisely, we argue that more generous employment protection for public sector employees may induce risk averse individuals to select into civil service employment even if they have a low intrinsic motivation and talent for this type of occupation. To empirically test for this effect, we exploit the natural experiment of the German reunification in 1990. While occupational choices in the Federal Republic of Germany (FRG) before 1990 may be affected by the described security motive, workers in the former German Democratic Republic (GDR) enjoyed an employment guarantee irrespective of their occupation. Using data from the German Socio-Economic Panel, we employ a difference-in-difference approach that takes absenteeism as a proxy for intrinsic worker motivation and productivity. The results suggest a significant selection effect: public sector employees who made their occupational choice in the FRG report more days of absence than the control group of civil servants who chose their occupation in the former GDR. This effect turns out to be robust against controlling for potential socio-economic and cultural differences between the groups.

Item Type: Other Working Paper
Keywords: public sector, employment protection, occupational choice
Centre: Oxford University Centre for Business Taxation > CBT Working Papers
Date Deposited: 23 Apr 2012 10:57
Last Modified: 15 Oct 2015 02:18
URI: http://eureka.sbs.ox.ac.uk/id/eprint/3237

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