How Much Are Government Jobs in Developing Countries Worth?

Abstract

Government jobs in developing countries are valuable not just because they pay relatively higher wages, but also because they provide many valuable amenities. How does the value of these amenities compare with the nominal wage itself? The observed search behavior of candidates preparing for competitive exams for government jobs is used to infer a lower bound on the total value of a government job, including amenities. Based on a sample of 147 candidates preparing for civil service exams in Pune, India, the amenity value of a government job is estimated to comprise at least two-thirds of total compensation. The high amenity value is not driven by misinformed beliefs about the nominal wage, nor by a high value placed on the process of studying itself. Insights from focus group discussions help explain which government job amenities are most valued in this setting.