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The effect of public sector employment on local labour markets

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  • Faggio, Giulia
  • Overman, Henry

Abstract

This paper considers the impact of public sector employment on local labour markets. Using English data at the Local Authority level for 2003–2007 we find that public sector employment has no identifiable effect on total private sector employment. However, public sector employment does affect the sectoral composition of the private sector. Specifically, each additional public sector job creates 0.5 jobs in the non-tradable sector (construction and services) while crowding out 0.4 jobs in the tradable sector (manufacturing). When using data for a longer time period (1999–2007) we find no multiplier effect for non-tradables, stronger crowding out for tradables and, consistent with this, crowding out for total private sector employment.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 79 (2014)
Issue (Month): C ()
Pages: 91-107

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Handle: RePEc:eee:juecon:v:79:y:2014:i:c:p:91-107

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Local labour markets; Public and private sector employment; Wages;

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Cited by:
  1. Dauth, Wolfgang & Findeisen, Sebastian & Suedekum, Jens, 2012. "The Rise of the East and the Far East: German Labor Markets and Trade Integration," IZA Discussion Papers 6685, Institute for the Study of Labor (IZA).
  2. Max Nathan, 2011. "Ethnic Inventors, Diversity and Innovation in the UK: Evidence from Patents Microdata," SERC Discussion Papers 0092, Spatial Economics Research Centre, LSE.
  3. Giulia Faggio, 2014. "Relocation of Public Sector Workers: Evaluating a Place-based Policy," SERC Discussion Papers 0155, Spatial Economics Research Centre, LSE.

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