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This study used data from a labor force study (1988) to answer a central question whether or not government sector employees are earning economic rent. Separate wages equations were estimated for government and private sector employees, males and females, and the overall average wages differential was decomposed into two parts: one due to different endowments of productivity related characteristics, and another due to a pure surplus or economic rent. The results show that females working in the government sector earn more economic rent compared to males working in the government sector. Females earn 17% of females wages in the private sector as economic rent compared to 10% of males wages in private sector for males.

Keywords: Government Sector, Private Sector, Overall Wages Differential, Economic Rent, Human Capital Investment, Wages Structure, Employees Endowments.