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Can Placement of Governmental Sector Jobs Spur Private Sector Employment and Performance?

Author

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  • Dale-Olsen, Harald

    (Institute for Social Research, Oslo)

  • Schone, Pal

    (Institute for Social Research, Oslo)

Abstract

We analyse the impact of establishment of governmental sector jobs on private sector employment based on Norwegian population-wide administrative-register data. Based on precise geographical information on the location of jobs, differential treatment intensities yield identification of causal effects. The results suggest that governmental employment has positive effects on private sector employment in the close proximity of the stimulus area. In the same area, we also observe positive short-term effects on wage growth and on firms' sales. Over time, only employment effects prevail. Two different types of placebo tests give support to the causal interpretation of the main results.

Suggested Citation

  • Dale-Olsen, Harald & Schone, Pal, 2020. "Can Placement of Governmental Sector Jobs Spur Private Sector Employment and Performance?," IZA Discussion Papers 13993, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13993
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    References listed on IDEAS

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    1. Enrico Moretti, 2010. "Local Multipliers," American Economic Review, American Economic Association, vol. 100(2), pages 373-377, May.
    2. Faggio, Giulia & Overman, Henry, 2014. "The effect of public sector employment on local labour markets," Journal of Urban Economics, Elsevier, vol. 79(C), pages 91-107.
    3. 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).
    4. Enrico Moretti & Per Thulin, 2013. "Local multipliers and human capital in the United States and Sweden," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(1), pages 339-362, February.
    5. Faggio, Giulia, 2019. "Relocation of public sector workers: Evaluating a place-based policy," Journal of Urban Economics, Elsevier, vol. 111(C), pages 53-75.
    6. Tito Boeri & Giuseppe Nicoletti & Stefano Scarpetta, "undated". "Regulation and Labour Market Performance," Working Papers 158, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    7. Vincenzo Caponi, 2017. "The effects of public sector employment on the economy," IZA World of Labor, Institute of Labor Economics (IZA), pages 332-332, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    regional labour markets; central government jobs; job creation;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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