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Public Enterprises And Labor Market Performance

Author

Listed:
  • Johannes Hörner
  • L. Rachel Ngai
  • Claudia Olivetti

Abstract

This article shows that state control of some industries may have contributed to the increase in European unemployment from the 1970s to the early 1990s. We develop a simple two-sector model, one privately run and one publicly run, that has risk-averse workers directing their search into one of the sectors. Assuming that the privately run sector is less able to insure its employees against uncertainty, we show that aggregate unemployment in this economy increases in response to an increase in economic turbulence. Copyright 2007 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Suggested Citation

  • Johannes Hörner & L. Rachel Ngai & Claudia Olivetti, 2007. "Public Enterprises And Labor Market Performance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 363-384, May.
    • Handle: RePEc:ier:iecrev:v:48:y:2007:i:2:p:363-384
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    Cited by:

    1. Fontaine, Idriss & Gálvez-Iniesta, Ismael & Gomes, Pedro & Vila-Martin, Diego, 2020. "Labour market flows: Accounting for the public sector," Labour Economics, Elsevier, vol. 62(C).
    2. Geromichalos, Athanasios & Kospentaris, Ioannis, 2022. "The unintended consequences of meritocratic government hiring," European Economic Review, Elsevier, vol. 144(C).
    3. Andri Chassamboulli & Pedro Gomes, 2018. "Meritocracy, Public-Sector Pay and Human Capital Accumulation," University of Cyprus Working Papers in Economics 08-2018, University of Cyprus Department of Economics.
    4. Jelena Lausev, 2014. "WHAT HAS 20 YEARS OF PUBLIC–PRIVATE PAY GAP LITERATURE TOLD US? EASTERN EUROPEAN TRANSITIONING vs. DEVELOPED ECONOMIES," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 516-550, July.
    5. Ardagna, Silvia, 2007. "Fiscal Policy in Unionized Labor Markets," Scholarly Articles 2580048, Harvard University Department of Economics.
    6. Gabriela Grotkowska & Leszek Wincenciak & Tomasz Gajderowicz, 2017. "Evolution of the Public-Sector Wage Premium in Poland," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 5-31.
    7. Michaillat, Pascal, 2011. "Fiscal Multipliers Over the Business Cycle," CEPR Discussion Papers 8610, C.E.P.R. Discussion Papers.
    8. Feng, Shuaizhang & Guo, Naijia, 2019. "Labor Market Dynamics in Urban China and the Role of the State Sector," IZA Discussion Papers 12170, IZA Network @ LISER.
    9. Andri Chassamboulli & Pedro Gomes, 2021. "Jumping the queue: nepotism and public-sector pay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 344-366, January.
    10. Gomes, Pedro, 2012. "Labour market flows: Facts from the United Kingdom," Labour Economics, Elsevier, vol. 19(2), pages 165-175.
    11. Bettoni, Luis G. & Santos, Marcelo R., 2022. "Public sector employment and aggregate fluctuations," Journal of Macroeconomics, Elsevier, vol. 72(C).
    12. Shuaizhang Feng & Naijia Guo, 2019. "Labor Market Dynamics in Urban China and the Role of the State Sector," Working Papers 2019-008, Human Capital and Economic Opportunity Working Group.
    13. Ardagna, Silvia, 2007. "Fiscal policy in unionized labor markets," Journal of Economic Dynamics and Control, Elsevier, vol. 31(5), pages 1498-1534, May.
    14. Grotkowska, Gabriela & Wincenciak, Leszek & Gajderowicz, Tomasz, . "Kształtowanie się premii z tytułu zatrudnienia w sektorze publicznym w Polsce," Gospodarka Narodowa-The Polish Journal of Economics, Szkoła Główna Handlowa w Warszawie / SGH Warsaw School of Economics, vol. 2017(1).
    15. Andrea Camilli & Pedro Gomes, 2023. "Public employment and homeownership dynamics," Public Choice, Springer, vol. 194(1), pages 101-155, January.
    16. Andri Chassamboulli & Pedro Gomes, 2019. "Public-Sector Employment, Wages and Human Capital Accumulation," University of Cyprus Working Papers in Economics 07-2019, University of Cyprus Department of Economics.
    17. Feng, Shuaizhang & Guo, Naijia, 2021. "Labor market dynamics in urban China and the role of the state sector," Journal of Comparative Economics, Elsevier, vol. 49(4), pages 918-932.
    18. Matteo Salto, 2016. "Fiscal Policy after the Crisis – Workshop Proceedings," European Economy - Discussion Papers 035, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    19. Pedro Gomes, 2009. "Labour market effects of public sector employment and wages," 2009 Meeting Papers 313, Society for Economic Dynamics.
    20. Chassamboulli, Andri & Gomes, Pedro, 2023. "Public-sector employment, wages and education decisions," Labour Economics, Elsevier, vol. 82(C).
    21. Kokoreva, Maria S. (Кокорева, Мария) & Stepanova, Anastasia N. (Степанова, Анастасия) & Karnoukhova, Elena V. (Карноухова, Елена), 2016. "What We Do not Know about the Ownership Structure of the Largest U.S. Companies? [Чего Мы Не Знаем О Структуре Собственности Крупнейших Компаний Сша?]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 6, pages 36-59, December.
    22. Jean-Baptiste Michau, 2013. "Unemployment Insurance And Cultural Transmission: Theory And Application To European Unemployment," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1320-1347, December.
    23. Gomes, Pedro Maia & Wellschmied, Felix, 2020. "Public-Sector Compensation over the Life Cycle," IZA Discussion Papers 13042, IZA Network @ LISER.

    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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