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Macroeconomic effects of shocks to public employment

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  • Linnemann, Ludger

Abstract

The paper discusses the short-run relation between public and private employment. Empirical evidence is presented suggesting that in aggregate US time series, increases in government employment appear to generate temporarily positive responses of private employment and real output. Unlike in the case of shocks to government spending on goods, this contradicts the predictions of business cycle models based on the neoclassical growth model. It is explored in how far a model which includes the production of useful public services can potentially explain the qualitative properties of the evidence.

Suggested Citation

  • Linnemann, Ludger, 2009. "Macroeconomic effects of shocks to public employment," Journal of Macroeconomics, Elsevier, vol. 31(2), pages 252-267, June.
  • Handle: RePEc:eee:jmacro:v:31:y:2009:i:2:p:252-267
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    Cited by:

    1. George Economides & Dimitris Papageorgiou & Apostolis Philippopoulos & Vanghelis Vassilatos, 2013. "Smaller Public Sectors in the Euro Area: Aggregate and Distributional Implications," CESifo Economic Studies, CESifo, vol. 59(3), pages 536-558, September.
    2. Vasilev, Aleksandar, 2016. "Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours," EconStor Open Access Articles, ZBW - German National Library of Economics.
    3. Steinar Holden & Victoria Sparrman, 2011. "Do Government Purchases Affect Unemployment?," CESifo Working Paper Series 3482, CESifo Group Munich.
    4. George Economides & Apostolis Philippopoulos & Petros Varthalitis, 2015. "Incentives to Work and Performance in the Public Sector," CESifo Working Paper Series 5193, CESifo Group Munich.
    5. Economides, George & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2014. "Public, or private, providers of public goods? A dynamic general equilibrium study," European Journal of Political Economy, Elsevier, vol. 36(C), pages 303-327.
    6. Lamo, Ana & Pérez, Javier J. & Schuknecht, Ludger, 2013. "Are government wages interlinked with private sector wages?," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 697-712.
    7. Vasilev, Aleksandar, 2015. "Macroeconomic effects of public-sector unions," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 101-126.
    8. repec:eee:dyncon:v:79:y:2017:i:c:p:21-47 is not listed on IDEAS
    9. Bermperoglou, Dimitrios & Pappa, Evi & Vella, Eugenia, 2017. "The government wage bill and private activity," Journal of Economic Dynamics and Control, Elsevier, vol. 79(C), pages 21-47.

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