I identify wage spillovers from the public to the corporate sector with the help of a large public sector wage increase, which raised public sector wages by 40 percent in two years time, changing the average public relative wage from a fallback of 10.5 percent to a 12.5 percent premium. The...

The paper looks at the effect of exceptionally large fluctuations in the level of public sector pay on the number and quality of workers moving from the private to the public sector in Hungary. Special emphasis is put on the unique pay rises taking place before and after the 2002 elections. The...