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RISK AVERSION AND THE PREFERENCE FOR PUBLIC SECTOR EMPLOYMENT: EVIDENCE FROM EGYPTIAN LABOR SURVEY DATA

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Author(s): Mona Sai

Journal: International Journal of Economics and Research
ISSN 2229-6158

Volume: 02;
Issue: 05;
Start page: 126;
Date: 2011;
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Keywords: Risk Aversion | Public Sector Employment | Sector Choice Probit Models | Egypt

ABSTRACT
This paper measures some of the effects of the long-standing policy of guaranteeing public sector employment to all university and technical secondary graduates in Egypt. Unlike previous studies, the paper measures risk aversion through sorting to determine the high valuation on job security in determining sector choice. Estimates of a sector –choice probit model employing cross-sectional data from two household surveys point to the profound impact of the graduate public sector employment guarantee on labor market segmentation in Egypt. In particular, the level of educational attainment became the most important factor in sorting workers between sectors. The main results of this paper highlight the importance of job security as the major factor determining the persistence of queues for public sector jobs in Egypt. Additionally, this paper draws policy lessons for designing early retirement and retrenchment packages for public sector employees in developing countries undertaking civil service reform
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