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Public Employment and the Business Cycle

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  • Vincenzo Quadrini
  • Antonella Trigari

Abstract

We add a public employment sector to the basic search and matching model in order to study the business cycle impact of public wage and employment policies. The government is assumed to follow exogenous rules for public wages and employment calibrated to match some cyclical features of US policies. These features include a positive public wage premium and mildly procyclical public wages and employment. We find that the presence of the public sector increases the volatility of employment and output. Copyright The editors of the "Scandinavian Journal of Economics" 2008 .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 109 (2008)
Issue (Month): 4 (03)
Pages: 723-742

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Handle: RePEc:bla:scandj:v:109:y:2008:i:4:p:723-742

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. Gonzalo Fernández-de-Córdoba & Javier Pérez & José Torres, 2012. "Public and private sector wages interactions in a general equilibrium model," Public Choice, Springer, Springer, vol. 150(1), pages 309-326, January.
  2. Eduardo Zilberman & Anna Dos Reis, 2013. "On the Optimal Size of Public Employment," 2013 Meeting Papers, Society for Economic Dynamics 482, Society for Economic Dynamics.
  3. D'Adamo, Gaetano, 2011. "Wage spillovers across sectors in Eastern Europe," MPRA Paper 27841, University Library of Munich, Germany.

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