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Municipal Labour Demand - Sweden 1988 - 1995

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Author Info
Bergström, Pål (Trade and Capital Markets)
Dahlberg, Matz () (Department of Economics)
Johansson, Eva () (Department of Economics)

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Abstract

In this paper we investigate the determinants of municipal labour demand in Sweden 1988-1995. Utilising a major grant reform in 1993, through which a switch from mainly targeted to mainly general central government grants occurred, we are able to identify which type of grants that have the largest effects on municipal employment. We find a larger municipal employment elasticity with respect to grants before the reform, implying that the more freedom given to the municipalities, the less they seem inclined to spend on municipal employment. We further find (i) a short run wage elasticity of approximately -0.5 and a long run ditto of approximately -0.9, (ii) a quite sluggish adjustment process: only 60% of the desired change in municipal employment is implemented in the first year, (iii) that the demographic structure is an important determinant of municipal employment, and (iv) that the behavioural pattern is different in "socialist" municipalities.

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Publisher Info
Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 1998:24.

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Length: 28 pages
Date of creation: 15 Nov 1998
Date of revision:
Publication status: Published in Labour Economics, 2004, pages 315-334.
Handle: RePEc:hhs:uunewp:1998_024

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Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
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Fax: + 46 18 471 14 78
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Related research
Keywords: Municipal labour demand; Panel data; Median voter model; Sluggishness;

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Borge, Lars-Erik & Rattso, Jorn, 1995. "Demographic shift, relative costs and the allocation of local public consumption in Norway," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 705-726, December. [Downloadable!] (restricted)
  2. Edin, Per-Anders & Fredriksson, Peter, 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Working Paper Series 2000:19, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  3. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Blackwell Publishing, vol. 58(2), pages 277-97, April. [Downloadable!] (restricted)
  4. Bailey, Stephen J & Connolly, Stephen, 1998. " The Flypaper Effect: Identifying Areas for Further Research," Public Choice, Springer, vol. 95(3-4), pages 335-61, June. [Downloadable!] (restricted)
  5. Hall, Robert E, 1978. "Stochastic Implications of the Life Cycle-Permanent Income Hypothesis: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 971-87, December. [Downloadable!] (restricted)
  6. Dahlberg, Matz & Johansson, Eva, 1998. "The Revenues-Expenditures Nexus: Panel Data Evidence from Swedish Municipalities," Applied Economics, Taylor and Francis Journals, vol. 30(10), pages 1379-86, October. [Downloadable!] (restricted)
  7. Borge, Lars-Erik & Rattso, Jorn, 1993. "Dynamic Responses to Changing Demand: A Model of the Reallocation Process in Small and Large Municipalities in Norway," Applied Economics, Taylor and Francis Journals, vol. 25(5), pages 589-98, May.
  8. Bergstrom, P., 1997. "On Bootstrap Standard Errors in Dynamic Panel Data Models ," Papers 1997-23, Uppsala - Working Paper Series.
  9. Aronsson, Thomas & Wikstrom, Magnus, 1996. "Local public expenditure in Sweden a model where the median voter is not necessarily decisive," European Economic Review, Elsevier, vol. 40(9), pages 1705-1716, December. [Downloadable!] (restricted)
  10. Hausman, Jerry A., 1980. "The effect of wages, taxes, and fixed costs on women's labor force participation," Journal of Public Economics, Elsevier, vol. 14(2), pages 161-194, October. [Downloadable!] (restricted)
  11. Holtz-Eakin, Douglas & Rosen, Harvey S, 1991. "Municipal Labor Demand in the Presence of Uncertainty: An Econometric Approach," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 276-93, July. [Downloadable!] (restricted)
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  12. Borge, Lars-Erik & Rattso, Jorn & Sorensen, Rune, 1995. " Local Government Service Production: The Politics of Allocative Sluggishness," Public Choice, Springer, vol. 82(1-2), pages 135-57, January.
  13. Blomquist, N. Soren, 1983. "The effect of income taxation on the labor supply of married men in Sweden," Journal of Public Economics, Elsevier, vol. 22(2), pages 169-197, November. [Downloadable!] (restricted)
  14. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
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  15. Courant, Paul N & Gramlich, Edward M & Rubinfeld, Daniel L, 1979. "Public Employee Market Power and the Level of Government Spending," American Economic Review, American Economic Association, vol. 69(5), pages 806-17, December. [Downloadable!] (restricted)
  16. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-95, November. [Downloadable!] (restricted)
  17. Dahlberg, Matz & Johansson, Eva, 1997. "An Examination of the Dynamic Behavior of Local Governments Using GMM Bootstrapping Methods," Working Paper Series 1997:11, Uppsala University, Department of Economics.
    Other versions:
  18. Ehrenberg, Ronald G, 1973. "The Demand for State and Local Government Employees," American Economic Review, American Economic Association, vol. 63(3), pages 366-79, June.
  19. Jerry A. Hausman, 1980. "The effect of wages, taxes, and fixed costs on women's labor force participation," NBER Chapters, in: Econometric Studies in Public Finance, pages 161-194 National Bureau of Economic Research, Inc.
  20. Ronald G. Ehrenberg & Joshua L. Schwarz, 1987. "Public Sector Labor Markets," NBER Working Papers 1179, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ahlin, Åsa & Johansson, Eva, 2001. "Individual demand for local public schooling: Evidence from Swedish survey data," Working Paper Series 2001:1, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
    Other versions:
  2. Ahlin, Åsa & Johansson, Eva, 2000. "Demand for Local Public Schooling: Another Brick in the Wall," Working Paper Series 2000:12, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
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