IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

The Effect of Public Sector Employment on Local Labour Markets

  • Giulia Faggio
  • Henry G. Overman

This paper considers the impact of public sector employment on local labour markets. Using English data at the Local Authority level for 2003 to 2007 we find that public sector employment has no identifiable effect on total private sector employment. However, public sector employment does affect the sectoral composition of the private sector. Specifically, each additional public sector job creates 0.5 jobs in the nontradable sector (construction and services) while crowding out 0.4 jobs in the tradable sector (manufacturing). When using data for a longer time period (1999 to 2007) we find no multiplier effect for nontradables, stronger crowding out for tradables and, consistent with this, crowding out for total private sector employment.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0111.

in new window

Date of creation: Jun 2012
Date of revision:
Handle: RePEc:cep:sercdp:0111
Contact details of provider: Web page:

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.:

as in new window
  1. Christian A. L. Hilber & Wouter Vermeulen, 2013. "The impact of supply constraints on house prices in England," Working Papers 2013/28, Institut d'Economia de Barcelona (IEB).
  2. B Ashcroft & J K Swales, 1982. "The Importance of the First round in the Multiplier Process: The Impact of Civil Service Dispersal," Environment and Planning A, , vol. 14(4), pages 429-444, April.
  3. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
  4. David Card & John E. DiNardo, 2000. "Do Immigrant Inflows Lead to Native Outflows?," NBER Working Papers 7578, National Bureau of Economic Research, Inc.
  5. J. N. Marshall & D. Bradley & C. Hodgson & N. Alderman & R. Richardson, 2005. "Relocation, relocation, relocation: Assessing the case for public sector dispersal," Regional Studies, Taylor & Francis Journals, vol. 39(6), pages 767-787.
  6. Peri, Giovanni & Sparber, Chad, 2011. "Assessing inherent model bias: An application to native displacement in response to immigration," Journal of Urban Economics, Elsevier, vol. 69(1), pages 82-91, January.
  7. B Ashcroft & J K Swales, 1982. "The importance of the first round in the multiplier process: the impact of Civil Service dispersal," Environment and Planning A, Pion Ltd, London, vol. 14(4), pages 429-444, April.
  8. George J. Borjas, 2005. "Native Internal Migration and the Labor Market Impact of Immigration," NBER Working Papers 11610, National Bureau of Economic Research, Inc.
  9. Giovanni Peri, 2009. "Rethinking the Area Approach: Immigrants and the Labor Market in California, 1960-2005," Working Papers 913, University of California, Davis, Department of Economics.
  10. Enrico Moretti, 2010. "Local Multipliers," American Economic Review, American Economic Association, vol. 100(2), pages 373-77, May.
  11. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521517133, October.
  12. Tito Boeri & Giuseppe Nicoletti & Stefano Scarpetta, . "Regulation and Labour Market Performance," Working Papers 158, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  13. Emma Hall & Carol Propper & John Van Reenen, 2008. "Can Pay Regulation Kill? Panel Data Evidence on the Effect of Labor Markets on Hospital Performance," CEP Discussion Papers dp0843, Centre for Economic Performance, LSE.
  14. Stephen Nickell & Glenda Quintini, 2002. "The Consequences of The Decline in Public Sector Pay in Britain: A Little Bit of Evidence," Economic Journal, Royal Economic Society, vol. 112(477), pages F107-F118, February.
  15. David Card, 2007. "How Immigration Affects U.S. Cities," CReAM Discussion Paper Series 0711, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  16. Patricia Cortes, 2008. "The Effect of Low-Skilled Immigration on U.S. Prices: Evidence from CPI Data," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 381-422, 06.
  17. Holmlund, Bertil, 1997. "Macroeconomic Implications of Cash Limits in the Public Sector," Economica, London School of Economics and Political Science, vol. 64(253), pages 49-62, February.
  18. Xavier Gabaix & Yannis M. Ioannides, 2003. "The Evolution of City Size Distributions," Discussion Papers Series, Department of Economics, Tufts University 0310, Department of Economics, Tufts University.
  19. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521739023, October.
  20. Richard Disney & Amanda Gosling, 2008. "Changing public sector wage differentials in the UK," IFS Working Papers W08/02, Institute for Fiscal Studies.
  21. George J. Borjas, 2002. "The Wage Structure and the Sorting of Workers into the Public Sector," NBER Working Papers 9313, National Bureau of Economic Research, Inc.
  22. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.
  23. Burdett, Ken, 2012. "Towards a theory of the labor market with a public sector," Labour Economics, Elsevier, vol. 19(1), pages 68-75.
  24. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, April.
  25. J. Bradford Jensen & Lori G. Kletzer, 2010. "Measuring Tradable Services and the Task Content of Offshorable Services Jobs," NBER Chapters, in: Labor in the New Economy, pages 309-335 National Bureau of Economic Research, Inc.
  26. J Neill Marshall & Catherine Hodgson & David Bradley, 2005. "Public sector relocation and regional disparities in Britain," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 23(6), pages 883-906, December.
  27. Ashcroft, Brian & Swales, J. K., 1982. "Estimating the effects of government office dispersal : An application of demand constrained shadow wages," Regional Science and Urban Economics, Elsevier, vol. 12(1), pages 81-97, February.
  28. Peri, Giovanni, 2011. "Rethinking the area approach: Immigrants and the labor market in California," Journal of International Economics, Elsevier, vol. 84(1), pages 1-14, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cep:sercdp:0111. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.