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Public employment and labor market performances

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Author Info
Yann Algan (FRJ - Fédération de recherche Jourdan - Ecole Nationale des Ponts et Chaussées - INRA - CEPREMAP - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Normale Supérieure de Paris - ENS Paris)
Pierre Cahuc (CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique)
André Zylberberg () (EUREQUA - Equipe Universitaire de Recherche en Economie Quantitative - CNRS : UMR8594 - Université Panthéon-Sorbonne - Paris I)

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Abstract

This paper deals with the consequence of public employment on labor market performances in 17 OECD countries over the period 1960-2000. It is argued that public employment had an important crowding out e¤ect on the private sector and increased the unemployment rate over this period. More precisely, empirical evidence suggests that the creation of one public job destroyed about 1.5 private job, sightly decreased participation to the labor market and eventually increased the number of unemployed workers by 0:3: Theoretical considerations and empirical evidence also suggest that the crowding out effect of public jobs on private jobs is more important in countries in which public production ishighly substitutable to private activities and in which the public sector provides high rents.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number halshs-00256207_v1.

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Date of creation: Apr 2002
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Publication status: Published, Economic Policy, 2002, 1-65
Handle: RePEc:hal:cesptp:halshs-00256207_v1

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Related research
Keywords: Employment; public employment; unemployment;

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References listed on IDEAS
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  1. Belot, Michèle & van Ours, Jan C., 2000. "Does the Recent Success of Some OECD Countries in Lowering their Unemployment Rates Lie in the Clever Design of their Labour Market Reform?," IZA Discussion Papers 147, Institute for the Study of Labor (IZA). [Downloadable!]
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  1. Vincenzo Scoppa, 2009. "Intergenerational transfers of public sector jobs: a shred of evidence on nepotism," Public Choice, Springer, vol. 141(1), pages 167-188, October. [Downloadable!] (restricted)
  2. Lawrence Kahn, 2003. "Labour Market Institutions and Unemployment in OECD Countries," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 1(4), pages 25-32, October. [Downloadable!]
  3. António Afonso & Pedro Gomes, 2008. "Interactions between Private and Public Sector Wages," Working Papers 2008/55, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
    Other versions:
  4. Giuseppe Bertola & Francine D. Blau & Lawrence M. Kahn, 2002. "Labor Market Institutions and Demographic Employment Patterns," NBER Working Papers 9043, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Etienne Lehmann, 2006. "Wage Rigidity or Fiscal Redistribution? The Unemployment Bias of Time Consistent Redistributive Policies," IZA Discussion Papers 2116, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Johannes Hörner & L. Rachel Ngai & Claudia Olivetti, 2004. "Public Enterprises and Labor Market Performance," CEP Discussion Papers dp0610, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  7. Lorenzo Forni & Raffaela Giordano, 2003. "Employment in the Public Sector," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. Céline Choulet, 2004. "Public employment and labour market performance : centralization wage setting effects," Cahiers de la Maison des Sciences Economiques v04036, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  9. Holmlund, Bertil, 2003. "The Rise and Fall of Swedish Unemployment," Working Paper Series 2003:13, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  10. Céline Choulet, 2006. "Public jobs creation and unemployment dynamics," Cahiers de la Maison des Sciences Economiques v06026, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  11. Lawrence Kahn, 2002. "The Impact of Wage-Setting Institutions on the Incidence of Public Employment in the OECD: 1960-98," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  12. Céline Choulet, 2006. "Public jobs creation and unemployment dynamics," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00113357_v1, HAL. [Downloadable!]
  13. Yves Abessolo, 2005. "Une analyse théorique de l’interaction entre l’emploi public et les performances du marché du travail dans les pays en développement," Documents de travail 110, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV. [Downloadable!]
  14. Horst Feldmann, 2006. "Government Size and Unemployment: Evidence from Industrial Countries," Public Choice, Springer, vol. 127(3), pages 443-459, June. [Downloadable!] (restricted)
  15. Giuseppe Bertola & Pietro Garibaldi, 2003. "The Structure and History of Italian Unemployment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  16. Paolo Ghinetti & Claudio Lucifora, 2008. "Public Sector Pay Gaps and Skill Levels: a Cross-Country Comparison," Working Papers 118, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont. [Downloadable!]
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