Forecasting public administration wage dynamics. An application to the italian national healt service

Abstract

This paper shows a methodological approach and applicative potential of a forecast model of public administration labor cost. The econometric model affords a tool for analysis and forecasting for the dynamics shaping the future evolution of compensation of employees in Public Administration, at a highly disaggregated level. Applied to the National Health Service (NHS), the model captures the change in shape of distribution and identifies the causes of wage dynamics arising from decentralized wage bargaining, personnel seniority, promotions and professional qualifications changes: a share effect, based on the personnel qualifications structure (weighed with a given average national wage); a shift effect, based on average wages dynamic (weighed with observation-specific personnel qualifications structure). Thanks to the use of simple relationships, the model is designed for maximum flexibility in use and it is an efficient tool for applications and analyses at the political-institutional level. Description of the results of applications reveals some of the model’s analysis potentialities, making particular reference to the ability to control wage dynamics.