OXFORD BULLETIN OF ECONOMICS AND STATISTICS. 56,2(1994) 0305-9049 THE ROLE OF EMPLOYER AND WORKPLACE SIZE IN THE US FEDERAL SECTOR JOB QUEUEt John S. Heywood and Madhu S. Mohanty I. INTRODUCTION Following Poirier's (1980) pioneering work on partial observability in hivariate probit models, several applications have been made to the labour market. Abowd and Farber (1982) used the techniques to find evidence of a queue for US union sector jobs as did Farber (1983) with a different specifi- cation. Venti (1987), Heywood and Mohanty (1990) and Mohanty (1992) have extended the examination to the US federal government confirming a queue of workers for federal sector jobs as well. The existence of a queue of workers waiting for federal jobs fits with a long line of research demonstrat- ing that US federal workers experience wage premiums which cannot be fully explained by differences in human capital and other personal characteristics (Ehrenberg and Schwarz, 1986). Krueger (1988) reports that the number of job applications per federal worker hired rises as the federal-private dif- ferential increases. Smith (1976, 1977), Quinn (1979) and Moulton (1990) report that both male and female workers in the federal government appear over-compensated relative to their otherwise equal private sector counter- parts. This, combined with generous federal sector fringe benefits (Heywood, 1991), presents a logical explanation for the presence of workers queuing for federal jobs. Typical examinations of the federal wage premium make no effort to hold constant the size of the employer and the size of the workplace. These variables are known to be important wage determinants within the private sector. At least as early as Lester (1967) we have known that workers in larger plants (workplaces) receive wages that are higher. More recently, Brown and Medoff (1989) found that in each of the more than one dozen studies they reviewed plant size and/or firm size emerged as a significant determinant of wages despite long lists of control variables. Indeed, their own work confirms the role of both plant and firm size as determinants of higher t The authors thank Dale Belman, Robert Drago, the participants in the UWM applied economics seminar and the reviewer for helpful suggestions. © Basil Blackwell Ltd. 1994. Published by Blackwell Publishers, 108 Cowley Road, Oxford 0X4 uF, UK & 238 Main Street, Cambridge, MA 02142, USA.