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The effect of public sector employment on local labour markets

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  • Giulia Faggio
  • Henry G. Overman

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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File URL: http://eprints.lse.ac.uk/50482/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 50482.

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Date of creation: 31 May 2013
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Publication status: Published in Journal of Urban Economics, 31, May, 2013, Online. ISSN: 0094-1190
Handle: RePEc:ehl:lserod:50482

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Keywords: local labour markets; public and private sector employment; wages;

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  18. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521739023, October.
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Citations

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Cited by:
  1. Jens Suedekum & Sebastian Findeisen & Wolfgang Dauth, 2012. "The Rise of the East and the Far East: German Labor Markets and Trade Integration," ERSA conference papers ersa12p883, European Regional Science Association.
  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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