The substantial increase in public sector wages in Mongolia introduced in the 2023 supplementary budget has raised … concerns about its potential spillover effects on private sector wages and subsequent inflationary pressures. Furthermore, both … public and private sector wages have grown on average faster than labor productivity in Mongolia during 2000-2023 with …

spending is crucial for its macroeconomic implications. Although reductions in public wages and government purchases of goods … reductions decrease private wages. Model counterfactuals show that sufficiently rigid nominal private wages can reverse the … response of private wages, as the rigidity dampens the labor reallocation effect from the public to private sector that exerts …

wage gap by one percent. Separate analyses by government sector and quantiles of the distribution of wages reveal that it …