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Does Government Employment "Crowd-Out" Private Employment?: Evidence from Sweden

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  • Jim Malley
  • Thomas Moutos

Abstract

It is argued that increases in government spending that take the form of increases in government employment can have a negative impact on private-sector employment by increasing real wages. In fact, once the supply reducing effects of higher taxes needed to finance the increase in government employment are taken into account, the fall in private employment can be so large as to cause decreases in aggregate employment. The authors demonstrate this with quarterly Swedish data for the period 1964-90. Copyright 1996 by The editors of the Scandinavian Journal of Economics.

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Bibliographic Info

Paper provided by University of Stirling, Division of Economics in its series Working Papers Series with number 92/16.

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Date of creation: Aug 1992
Date of revision:
Handle: RePEc:stl:stlewp:92/16

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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
Phone: +44 (0)1786 467473
Fax: +44 (0)1786 467469
Web page: http://www.econ.stir.ac.uk/
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Cited by:
  1. Alberto Behar & Junghwan Mok, 2013. "Does Public-Sector Employment Fully Crowd Out Private-Sector Employment?," IMF Working Papers 13/146, International Monetary Fund.
  2. Aleksandar Vasilev, 2013. "Fiscal policy in a Real-Business-Cycle model with labor-intensive government services and endogenous public sector wages and hours," Working Papers 2013_18, Business School - Economics, University of Glasgow.
  3. Jim Malley & Thomas Moutos, . "Government Employment and Unemployment: With One Hand Giveth, The Other Taketh," Working Papers 9709, Business School - Economics, University of Glasgow, revised May 1998.
  4. Fernàndez-de-Córdoba, Gonzalo & Pérez, Javier J. & Torres, José L., 2009. "Public and private sector wages interactions in a general equilibrium model," Working Paper Series 1099, European Central Bank.
  5. Horst Feldmann, 2006. "Government Size and Unemployment: Evidence from Industrial Countries," Public Choice, Springer, vol. 127(3), pages 443-459, June.
  6. Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2002. "Fiscal Policy, Profits, and Investment," American Economic Review, American Economic Association, vol. 92(3), pages 571-589, June.
  7. Arzu Yavuz, 2011. "Productivity and Wage Differentials between Private and Public Sector in the Developing Countries (Gelismekte Olan Ülkelerde Özel ve Kamu Sektöründeki Verimlilik ve Ücret Farklilasmasi)," Working Papers 1103, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  8. Ardagna, Silvia, 2007. "Fiscal Policy in Unionized Labor Markets," Scholarly Articles 2580048, Harvard University Department of Economics.
  9. Ardagna, Silvia, 2007. "Fiscal policy in unionized labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 31(5), pages 1498-1534, May.

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