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Does Labour Market Risk Increase the Size of the Public Sector? Evidence from Swedish Municipalities

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  • Vlachos, Jonas

Abstract

It has been argued that the public sector is an insurance against otherwise uninsurable risks. If that is the case, it is reasonable to expect the public sector to be larger in regions where the private labour-market is risky. Using data from Swedish municipalities, this paper reports that labour-market risk has a substantial impact on public employment. The results for aggregate spending and taxation are, however, much weaker and labor-market risk thus affects the labour intensity of the municipal public sector.

Suggested Citation

  • Vlachos, Jonas, 2005. "Does Labour Market Risk Increase the Size of the Public Sector? Evidence from Swedish Municipalities," CEPR Discussion Papers 5091, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:5091
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    References listed on IDEAS

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    More about this item

    Keywords

    labour market risk; panel data; public employment; public sector size;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets

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