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The economics of public sector employment

Our Dr Pedro Gomes has been researching public employment for nearly fifteen years. He shares why it is so important to understand how the public sector works and the key findings from his research.

Public employment is a significant consideration in any national economy. In developed countries, public employment makes up 15-30 percent of total employment and represents the large majority of government consumption. In the US, for example, the government spends 60 percent more on general government employees than on the purchase of intermediate goods and services.

The public sector also operates according to different rules than the rest of the economy, as governments do not face the same competitive forces, nor have the same objectives as private sector firms.

Considering that the public sector is responsible for delivering many key services in our society, from education to healthcare, it is essential to have a good understanding of how its employment operates. The recent COVID-19 pandemic has again put focus on the importance of having a modern public sector, with an employment force prepared to face difficult, unpredictable and unlikely crises, but its aftermath with high public debt, also puts emphasis on the costs of the public sector workforce.

Below are three of the key findings from my research into this area.

Governments hire disproportionately more educated workers

In the paper Public Employment Redux, my colleagues Pietro Garibaldi, Thepthida Sopraseuth and I explore the phenomenon whereby governments hire more educated workers than the private sector.

We noticed that governments hire very few workers with low qualifications. In the US, for example, one third of workers have a masters or a PhD qualification, and one third of these work for the government.  We documented empirical evidence for this education bias in the US, UK, France and Spain.

There are a few different explanations for this trend:

  • The government needs more educated workers to provide its highly technical goods and services, such as healthcare, education and the judicial system.
  • Higher educated workers take more of a wage penalty to work in the public sector, so are relatively less expensive to hire.
  • Public sector jobs that require low qualifications pay more than similar level jobs in the private sector, so they attract workers with more qualifications.

Within our model, we found that the technological skills needed for the public sector was the main driver of the disproportionate representation of educated workers, but that wage setting and excess underemployment explain 12-15 percent of the education bias.

Unlike other sectors, the government is able to set wages more freely, as the cost is financed from tax revenue. If the government chooses to pay very high wages, too many people will choose a skilled role in the public sector as their first choice. However, if wages are too low, too few workers will want to join the government.

In reality, a balance is needed, so the government can always attract the workers it needs, without leading to underemployment in the public sector.

Nepotism in hiring practices allows friends and family to ‘jump the queue’ for government roles

Public sector hires are often based on nepotism: Scopa (2009) found that the probability of working in the public sector is 44% higher for individuals whose parents also work in the public sector, while Colonnelli et al. (2020) found that politically connected individuals in Brazil enjoy easier access to public sector jobs.

In my research into this topic with Andri Chassamboulli, we suggest that workers can use their connections to find jobs in the public sector faster. We created a search and matching model with private and public sectors to test this theory.

Surprisingly, we encountered some positive side effects to nepotistic practices. Conditional on high public sector wages, our findings suggest that hiring through connections reduces unemployment, as people who do not have connections will instead find roles in the private sector. Conversely, if the government sets the optimal wage possible for the successful running of the public sector, nepotism is reduced.

We conclude, therefore, that nepotism is a symptom of a problem in the public sector, rather than the disease, and the problem is created when wages are set too high.

Women prefer working in the public sector

In most countries, the public sector hires disproportionately more women than men. My colleague Zoë Kuehn and I developed a model to try to make sense of this imbalance.

Our findings show that the gender imbalance in the public sector is driven by supply, meaning that women self-select to work in the public sector more than men. One explanation for this is that the type of job carried out by the government is coincidentally the type of work preferred by women, such as healthcare and education. However, even discounting these sectors, women’s public employment remains 20-25% higher than men.

This remaining imbalance can be explained by the different characteristics of public and private employment. The gender wage gap and working hours are both reduced in the public sector, making this an attractive choice for women who may be factoring family commitments alongside work opportunities in their choice of employment. Alongside reduced working hours, the public sector offers additional benefits such as more sick days, flexible hours and employer-provided childcare, ensuring an overall better work-life balance in the public sector.

 

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Hypermasculine organisations and barriers to women’s career progression in Nigeria

Dr Vanessa Iwowo shares the findings from her latest research into gender inequality in the workplace in Nigeria.

Discussions around the barriers to women’s career progression are not new to the public agenda, especially during the COVID-19 pandemic, which has highlighted the unequal division of domestic labour and caring responsibilities in the home.

However, the majority of research in this area has been developed in the global north and thus overlooks the significance of specific economic, social and cultural conditions that exist in other contexts.

With my colleagues Toyin Ajibade Adisa (University of East London), Chima Mordi and Ruth Simpson (Brunel University), I sought to uncover the specific barriers facing women’s career progression in Nigeria.

Why Nigeria? Often referred to as the “giant of Africa”, the country is notable both for its economic prosperity and entrenched patriarchal values. The barriers to women advancing their careers in Nigeria could have wider implications for gender equality in the global south.

Gender inequality and Social Dominance Theory

Despite legislation which supports gender equality and Nigeria’s participation in international agreements to eliminate gender discrimination, the problem persists. Prior research into 190 Nigerian companies found that just 10.5% of board seats are held by women. In the civil service, where women account for 24% of the workforce, they hold less than 14% of overall management positions.

Examined through the lens of Social Dominance Theory (SDR), which purports that social groups are hierarchically positioned, we see how cultural ideologies and institutional discrimination work together to produce group-based inequality. A gender-based hierarchy dominates, where men are consistently favoured, gaining disproportionate positive social and material value at the expense of the subordinate group, women.

This group-based oppression is driven by systemic individual and institutional discrimination and supported by stereotypes, attitudes and beliefs which dictate the norms that govern institutions. These hierarchies are especially hard to break down as they are embedded in social systems.

Challenges to career advancement faced by women in Nigeria

Entrenched stereotypical attitudes about the role of women in Nigeria means that management and leadership are viewed as the exclusive domain of men, while women are seen to belong in the domestic sphere.

This hypermasculine context only serves to exacerbate the barriers faced by women in their careers. In interviews with 43 women working in the five major administrative capitals of Nigeria, we identified three key barriers to progression at work:

  1. Systemic and excessive male-group-based domination

Every woman that we spoke to identified a bias in recruitment and promotion decisions in their organisation, which inhibits women’s progression to more senior roles. An approach based on merit is overruled by a preference for a male candidate, regardless of capability. What is more, this bias is openly acknowledged, with the allocation of male candidates to senior roles seen as a foregone conclusion.

  1. Corruption and the exchange of favours

The vast majority of women that we spoke to (39 out of 43 interviewees) had personally encountered corruption in the workplace in the form of “godfatherism”, the practice wherein a woman is expected to exchange money or sexual favours for progression in the workplace.

The consequences of godfatherism are both devastating and wide-reaching: either a woman is cut off from career advancement, or she is coerced into a sexual relationship in order to progress. Such is the commonality of this practice, that the promotion of a woman is often associated with this exchange in the eyes of employees.

  1. Domestic responsibilities

The expectation that women will take full responsibility for domestic arrangements is entrenched from a young age, when girls are made to take on household responsibilities while boys are left to play. A few women also reported being overlooked for a university education in the family, due to the assumption that this was an unnecessary expense for them to fulfil their predetermined roles as wives and mothers.

A unique national context

Our research suggests that Nigerian women are being held back in their careers by discrimination and corruption particular to their national context, such as entrenched patriarchal values, assumptions about the role of women and ingrained cultural and religious beliefs.

While male dominance and barriers to women’s career progression are not unique to Nigeria, the way in which patriarchal structures are embedded across all systems and institutions is particular to the national context.

For example, there are some potential commonalities to be drawn between godfatherism and the western #MeToo movement. However, where corruption in the west is widely challenged, godfatherism is normalised. Indeed, it forms part of a wider cultural context in which it is seen as fundamentally “un-African” for a woman to lead.

Aside from denying women the right to self-actualization and economic independence, hypermasculine organisations which exploit and enforce entrenched gender roles are limited by a lack of diversity in the workforce. Social Dominance Theory would suggest that the way to overcome these barriers is through challenging the status quo and “mainstreaming” hierarchy-attenuating attitudes from non-dominant groups. A deeper understanding of these attitudes and how they manifest in the workplace may go some way towards challenging entrenched beliefs and practices and working towards a more equal future.

This blog is based on the paper ‘Social dominance, hypermasculinity and career barriers in Nigeria’ in Gender, Work & Organization.

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Why do women favour working in the public sector?

Research carried out by Birkbeck’s Dr Pedro Gomes and Professor Zoë Kuehn from the Universidad Autónoma de Madrid aims to understand why women self-select to the public sector.

The public sector is a large employer, accounting for between 10 and 35 percent of total employment in OECD countries. In most countries, the public sector hires disproportionately more women than men. With my colleague Zoë Kuehn, I developed a model to try and understand this imbalance.

Through the lens of our model, we view the gender bias in public employment as driven by supply, meaning that it is not the government that acts explicitly to hire more women, but it is women that choose the public sector more so than men. Our objective was to better understand this selection, in particular, how much of it is explained by public sector job characteristics that are related to management, organization and human resource practices in the public sector.

We documented gender differences in employment, transition probabilities, hours, and wages in the public and private sector using microdata for the United States, the United Kingdom, France, and Spain. We then built a search and matching model where men and women could decide whether to participate and whether to enter private or public sector labor markets. Running counterfactual experiments, we quantified whether the selection of women into the public sector was driven by: (i) lower gender wage gaps and thus relatively higher wages for women in the public sector, (ii) possibilities of better conciliation of work and family life for public sector workers, (iii) greater job security in the public compared to the private sector, or (iv) intrinsic preferences for public sector occupations.

A natural explanation for the gender bias in public employment could be that certain types of jobs that are predominantly carried out by the government could be preferred by women. However, our research revealed that, for the US, the UK, and France, once we exclude health care and education, women’s public employment is still 20-50% higher than men’s. Interestingly enough, the gender bias is less pronounced within public health care and public education compared to other branches of public employment.

Regarding transition probabilities, we estimated that the probability of moving from employment to inactivity is higher for women, but we found this probability to be significantly lower for public sector workers.

We also provided evidence that gender wage gaps and working hours are lower in the public sector. Individuals holding full time jobs in the public sector work between 3-5% fewer hours compared to similar individuals holding full time jobs in the private sector. However, fewer working hours are just one aspect of a better work-life balance (next to additional sick days, holidays, flexibility to work from home, employer provided child care etc.). In our model we wanted to capture differences in work-life balance across sectors in an ample sense, and hence we do not use these estimates to identify any parameters. Nevertheless, our results on fewer working hours in the public sector support the claim of a better work-life balance in the public compared to the private sector.

The results of our research suggest that women’s preferences explain 20 percent of the gender bias in France, 45 percent in Spain, 80 percent in the US, and 95 percent in the UK. The remaining bias is explained by differences in public and private sector characteristics, in particular relatively higher wages for female public sector workers that explain around 30 percent in the US and Spain and 50 percent in France. Only for France and Spain do we find work-life balance to be an important driver that explains 20 to 30 percent of the gender bias. Higher job security in the public sector actually reduces the gender bias because it is valued more by men than by women.

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Why are women prisoner numbers rising so rapidly?

Catherine Heard, from the Institute for Criminal Policy Research (ICPR) at Birkbeck, discusses the latest data released in the World Female Imprisonment List. Catherine directs the World Prison Research Programme at ICPR, which hosts and publishes theWorld Prison Brief.

This week at ICPR, we released the most comprehensive global dataset ever produced on women prisoner numbers. The fourth edition of our World Female Imprisonment List – published on 9 November – shows that the world’s female prison population has increased by about 53% since 2000. In comparison, the male prison population has gone up by around 20%. Numbers of women prisoners are rising in every continent of the globe, with significant increases reported in both developed and less developed countries.

The surge in numbers of incarcerated women is all the more troubling given the high levels of vulnerability we know exist among women who get caught up in criminal justice processes. Women and girls in prison usually come from backgrounds of disadvantage. They are highly likely to have been victims of crime themselves and are far more likely than other women to have histories of trauma, abuse, neglect and mental ill health. The World Health Organisation estimated in a 2009 report that up to 80% of women prisoners have an identifiable mental illness.

For virtually every country across the globe, the List gives information on the total number of women and girls in prison; the percentage of that country’s prison population comprised by women; and the number of imprisoned women and girls per 100,000 of the national population (the ‘prison population rate’). The List also includes information about trends in female imprisonment, at national, regional and continental levels. For most countries, the List gives trend data back to 2000 and at intervals since. (On the World Prison Brief website, trend data going back much further in time are available for many countries’ overall imprisonment levels.)

The List shows, for example, that in England and Wales, the total number of women prisoners has fallen somewhat since the high levels seen in 2005 and 2010, although it’s still higher than it was in 2000. We learn that our female prison population rate is 6.7 per 100,000 of the general population, compared with the Netherlands’ rate of 3.2 (reduced from over 11 per 100,000 in 2006).

Some of the biggest increases have occurred in countries struggling with severely overcrowded prisons, where conditions are already reported as inhumane. In El Salvador, for example, female prisoners are now at 10 times the level they were in 2000, while in Cambodia and Indonesia, numbers have increased six-fold. The data present a worrying picture of uncontrolled growth in numbers, often in countries whose prison systems are being expected to deal with ever-larger influxes, while deprived of the resources to do so.

If we set these new figures within the wider context of what we know about prison conditions and human rights infringements in some parts of the world, the implications are alarming. In Brazil, for example, where around about 44,700 women and girls are now in prison – more than four times the number in 2000 – severe resource constraints make it impossible for the country’s prison system to comply with laws stipulating that women prisoners be housed in separate facilities from men. As a result, some women are held in designated wings of men’s prisons, leading to a risk of assaults and violence from male prisoners and staff, as Human Rights Watch has reported. Female prisoners who are held in women-only prisons endure appalling levels of overcrowding and a lack of access to even basic medical care and treatment.

Our prisons research at ICPR aims to bring about a deeper understanding of the many interwoven factors that combine to drive increases in countries’ use of imprisonment and to find concrete, practical solutions to end the unsustainable increases in imprisonment levels that we have seen in recent history. To do this, we need to focus on providing a much better account of who it is that our states choose to imprison, and why.

This is the aim of our current project, Understanding and reducing the use of imprisonment worldwide, which we are undertaking in collaboration with a network of NGOs, academics, lawyers and criminal justice practitioners. The project entails an in-depth exploration of imprisonment in 10 jurisdictions across all five continents. Those countries are Kenya, South Africa, Brazil, the United States, India, Thailand, England & Wales, Hungary, the Netherlands and Australia. Among these are countries with some of the largest prison populations in the world: the USA, Brazil, India and Thailand are all in the top six globally. Most of these 10 countries have seen very significant increases in their female prison populations since 2000, as the List shows.

In our report, Prison: Evidence of its use and over-use from around the world, we discuss some of the key themes to be addressed if we are to reverse this worrying trend of rising prison populations. Perhaps the most challenging, yet important, among these themes is the need to ask what purposes imprisonment can reasonably and realistically be expected to serve, both as a matter of general principle and in individual cases.

Women across the world are predominantly incarcerated for minor, non-violent, property or drug-related crimes and are often primary carers for one or more children or older family members. This surely suggests that the economic and social costs of imprisoning women will, in most cases, outweigh the supposed benefits, which should prompt us to look more carefully at whom we imprison and ask, in every case, why we imprison and what we expect prison to achieve.

A note on the data

Compiling the List and all the comparative and trend data it contains is no mean feat – one that Roy Walmsley has undertaken every year since the World Prison Brief was founded in 2000. Having to work to the same cut-off date for all countries inevitably means that, by the time the List is published, more recent figures will have been released for many countries. People wanting to ensure they have the very latest data available should always check the World Prison Brief website – whether they are looking for data on a particular country or region, or want to see how countries rank globally.

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