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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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  • Joseph Gyourko & Joseph Tracy, 1989. "Public Sector Bargaining and the Local Budgetary Process," NBER Working Papers 2915, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2915
    Note: LS

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    1. repec:eee:labchp:v:3:y:1999:i:pc:p:3573-3630 is not listed on IDEAS
    2. Holtz-Eakin, Douglas & Rosen, Harvey S, 1991. "Municipal Labor Demand in the Presence of Uncertainty: An Econometric Approach," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 276-293, July.
    3. Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
    4. Gabriela Miranda Moriconi & João S. Moura Neto & Nelson Marconi & Paulo Roberto Arvate, 2006. "Evidências Sobre O Comportamento Dos Governos Estaduais Na Determinação Dos Salários Dos Servidores Públicos No Brasil," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 135, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    5. James M. Poterba & Kim S. Rueben, 1998. "Fiscal Institutions and Public Sector Labor Markets," NBER Working Papers 6659, National Bureau of Economic Research, Inc.
    6. Torberg Falch & Bjarne Strøm, 2003. "Wage Bargaining and Political Strength in the Public Sector," Working Paper Series 3203, Department of Economics, Norwegian University of Science and Technology.
    7. Jan K. Brueckner, 2001. "Prior Restrictions on Bargaining Contract Curves," Economics Bulletin, AccessEcon, vol. 10(1), pages 1-7.

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