Overpaid Bureaucrats Starve the Economy

Cross‑country models show high public‑sector wage premiums pull productive workers out of firms, reducing job creation and GDP. In Greece, a 10% cut to public wages raises private productivity by 3.8%, cuts unemployment 7.3%, and lifts GDP 1.3%; in Brazil, trimming the premium from 19% to 15% and aligning pensions boosts long‑run output by 11.2%. Public pay structure is acting like a growth tax in poorer states. — It reframes civil‑service pay as macro policy, not just fairness, with large stakes for unemployment and productivity.