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Public jobs creation and unemployment dynamics

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This paper raises the question of the dynamic effects of public spending in jobs on labor market performance. We use a dynamic matching model and study how public jobs creation affects endogenous workers' decisions to move on the labor market and private-sector firms' job creation and destruction decisions. We obtain that it exerts an attracting effect and a fiscal effect on the labor market that make the unemployment rate and job flows overshoot. As an empirical illustration, we estimate a SVAR model that focuses on the consequences of public job creations on unemployment, wages and job flows dynamics. We confirm our intuition: public employment has a significant ambiguous effect on private wages

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  • Céline Choulet, 2006. "Public jobs creation and unemployment dynamics," Cahiers de la Maison des Sciences Economiques v06026, Université Panthéon-Sorbonne (Paris 1).
  • Handle: RePEc:mse:wpsorb:v06026
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    File URL: https://halshs.archives-ouvertes.fr/halshs-00113357
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    Cited by:

    1. Bruno Coquet, 2016. "Secteur Public : l'assurance chômage qui n'existe pas," Sciences Po publications info:hdl:2441/7ag1gjr51l8, Sciences Po.

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    More about this item

    Keywords

    Public sector labor market; unemployment dynamics;

    JEL classification:

    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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