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Public Sector Bargaining and the Local Budgetary Process

  • Joseph Gyourko
  • Joseph Tracy

This paper investigates how the fiscal environment and the budgetary process affect wage and employment determination in the local public sector. The structure of the local tax system is found to be influential with significantly higher wages occurring in cities with access to local sales and/or income taxes. State-imposed property tax limits are found to be associated with lower wages (but not overall payrolls per capita). We find evidence that skill enhancement may be an important policy tool. Local governments appear to successfully use it to mitigate the wage premia associated with strong state collective bargaining legislation. We also find that controlling for the human capital of teachers substantially reduces the well-known positive correlation between teacher wages and community income.

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File URL: http://www.nber.org/papers/w2915.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2915.

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Date of creation: Mar 1989
Date of revision:
Publication status: published as Research in Labor Economics, Vol. 12, 1991, pp. 117-136
Handle: RePEc:nbr:nberwo:2915
Note: LS
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