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Interaction of Public and Private Employment: Evidence from a German Government Move

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  • Giulia Faggio
  • Teresa Schlüter
  • Philipp vom Berge

Abstract

We use the German government move from Bonn to Berlin in 1999 to test competing views about the impact of public employment on private sector activity in a local labor market. A relocated public sector job might create new jobs in an area as it increases demand for locally-produced goods and services, or crowd out existing jobs due to upward pressure on housing rents. Using employment data from a panel of a 50% sample of establishments across 190 Berlin postcodes, we apply a treatment intensity approach which takes the possibility of spillovers into account. Results indicate that the arrival of 100 public sector jobs into an area generates 55 additional jobs in the private sector. There is evidence of spillovers: relocations up to a distance of 1km from a postcode boundary increases employment in the private sector by 36 jobs. These effects are coming through job gains in the service sector, while manufacturing employment is not influenced by the relocation.

Suggested Citation

  • Giulia Faggio & Teresa Schlüter & Philipp vom Berge, 2018. "Interaction of Public and Private Employment: Evidence from a German Government Move," SERC Discussion Papers 0229, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:sercdp:0229
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    Cited by:

    1. Becker, Sascha O. & Heblich, Stephan & Sturm, Daniel M., 2021. "The impact of public employment: Evidence from Bonn," Journal of Urban Economics, Elsevier, vol. 122(C).
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    3. Arthur Guillouzouic & Emeric Henry & Joan Monras, 2021. "Local Public Goods and the Spatial Distribution of Economic Activity," Institut des Politiques Publiques hal-03389155, HAL.
    4. Philipp vom Berge & Achim Schmillen, 2023. "Effects of mass layoffs on local employment—evidence from geo-referenced data," Journal of International Economic Law, Oxford University Press, vol. 23(3), pages 509-539.
    5. Eppelsheimer, Johann & Jahn, Elke J. & Rust, Christoph, 2022. "The spatial decay of human capital externalities - A functional regression approach with precise geo-referenced data," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    6. Philipp vom Berge & Achim Schmillen, 2023. "Effects of mass layoffs on local employment—evidence from geo-referenced data," Journal of Economic Geography, Oxford University Press, vol. 23(3), pages 509-539.
    7. Nathan, Max & Overman, Henry & Riom, Capucine & Sanchez-Vidal, Maria, 2024. "Multipliers from a Major Public Sector Relocation: The BBC Moves to Salford," IZA Discussion Papers 17337, Institute of Labor Economics (IZA).
    8. Jofre-Monseny, Jordi & Silva, José I. & Vázquez-Grenno, Javier, 2020. "Local labor market effects of public employment," Regional Science and Urban Economics, Elsevier, vol. 82(C).
    9. Richard Bluhm & Christian Lessmann & Paul Schaudt, 2021. "The Political Geography of Cities," CESifo Working Paper Series 9376, CESifo.
    10. repec:iab:iabdpa:202021 is not listed on IDEAS

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    Keywords

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    JEL classification:

    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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