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Interaction of public and private employment: evidence from a German government move

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  • Faggio, Giulia
  • Schlüter, Teresa
  • Berge, Philipp vom

Abstract

We use the German government move from Bonn to Berlin in 1999 to explore the interaction between public and private sector employment within a local labor market. Our findings show a positive effect of public sector expansion on private sector employment, with a local multiplier of 1.32–1.35, mainly driven by the service sector. The policy impact is highly localized, strongest within 300 m of a relocation site, and evident one year after the relocation. Three quarters of new private sector jobs were created by establishments that did not exist before 1998. These newly created jobs disproportionally employ women, younger workers, individuals in managerial and professional roles, and those with lower levels of education.

Suggested Citation

  • Faggio, Giulia & Schlüter, Teresa & Berge, Philipp vom, 2025. "Interaction of public and private employment: evidence from a German government move," LSE Research Online Documents on Economics 127211, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:127211
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    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).
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    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, IZA Network @ LISER.
    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," SoDa Laboratories Working Paper Series 2021-11, Monash University, SoDa Laboratories.
    10. Eppelsheimer, Johann & Rust, Christoph, 2020. "The Spatial Decay of Human Capital Externalities - A Functional Regression Approach with Precise Geo-Referenced Data," IAB-Discussion Paper 202021, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Arthur Guillouzouic & Emeric Henry & Joan Monras, 2021. "Local Public Goods and the Spatial Distribution of Economic Activity," Sciences Po Economics Publications (main) hal-03389155, HAL.

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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
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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