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Does government employment crowd out private sector employment in sids? the case of Barbados


  • Roland Craigwell

    (University of the West Indies, Barbados)

  • Mahalia Jackman

    () (Antilles Economics, Barbados)


This paper uses a two-step Markov-switching error correction model to determine the impact of government employment on the labour market in Barbados, a small island developing Caribbean state. The results suggest that there is partial crowding out, as public sector hiring reduces private employment but the net impact of unemployment is negative. These findings hint that there may be some merit in a countercyclical employment policy in SIDS. In addition, the results suggest that the tax and debt expense are two channels through which crowding out can occur.

Suggested Citation

  • Roland Craigwell & Mahalia Jackman, 2014. "Does government employment crowd out private sector employment in sids? the case of Barbados," Journal of Developing Areas, Tennessee State University, College of Business, vol. 48(4), pages 309-326, October-D.
  • Handle: RePEc:jda:journl:vol.48:year:2014:issue4:pp:309-326

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    More about this item


    Unemployment; government employment; private employment; crowding out; Barbados; SIDS;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy


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