01803cas a2200241 a 4500 AALejournalIMF000226 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451922554 1018-5941 BD-DhAAL BD-DhAAL International Monetary Fund. Do Government Wage Cuts Close Budget Deficits? : A Conceptual Framework for Developing Countries and Transition Economies. Washington, D.C. : International Monetary Fund, 1996. 1 online resource (40 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Real wage declines have been common in the public sector in many countries over substantial periods of time. In several cases, such wage reductions have coincided with a decline in the efficiency of the public sector. In a simple analytical framework, it is shown that higher wage levels alter the incentive compatible equilibrium by attracting relatively skilled human capital to the government sector, which raises the quality of public output--tax revenue collection in this paper. Increases in wages should be complemented with appropriate monitoring and penalty rates for effective tax administration; prescriptions of raising the statutory tax rate alone, however, may not increase revenue collection. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1996/019 Full text available on IMF http://elibrary.imf.org/view/journals/001/1996/019/001.1996.issue-019-en.xml IMF e-Library