Optimal Public Sector Compensating Wage Differential in Geographical locations of the Czech Republic

摘要

This paper deals with issues of labor remuneration in public sector in consideration of different labor locations. Current pay structure in public sector of the Czech Republic offers an inequitable and inefficient wages across various geographical locations of the country. If personnel on comparable positions is getting the same wage in the whole country, due to the different wage demands in different locations, this personnel is paid less competitive wages in high-cost and/or low-amenity locations compared to low-cost and/or high-amenity locations. This pay system results in unequal labour supply level across locations and inefficiencies represented by overpayment and personnel shortage at the same time. Wages set according to local labour market compensating wage differentials would result in a higher efficiency and more stabilized public administration at each location.