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Public Sector Employment in an Equilibrium Search and Matching Model

Author

Listed:
  • Susan Vroman

    (Georgetown University)

  • Lucas Navarro

    (ILADES, Universidad Alberto Hurtado)

  • James Albrecht

    (Georgetown University)

Abstract

In this paper, we extend the standard Pissarides model of equilib- rium unemployment to incorporate public-sector employment. We modify the Pissarides model in three ways. First, we assume that workers are het- erogeneous in terms of human capital. Second, we assume that productivity is match speciÂc and that the distribution of match-speciÂc productivity is more favorable in the sense of Ârst-order stochastic dominance the higher is a workerÂs human capital. Third, we allow for both private- and public- sector employment. In this preliminary version of the paper, we lay out the model and prove the existence of equilibrium. In the next version of the paper, we will numerically analyze the e¤ects of public-sector employment policy on the distributions of wages, productivities and human capital levels in the two sectors and on overall employment and welfare.

Suggested Citation

  • Susan Vroman & Lucas Navarro & James Albrecht, 2011. "Public Sector Employment in an Equilibrium Search and Matching Model," 2011 Meeting Papers 390, Society for Economic Dynamics.
  • Handle: RePEc:red:sed011:390
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    References listed on IDEAS

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    4. Jake Bradley & Fabien Postel-Vinay & Hélène Turon, 2017. "Public Sector Wage Policy and Labor Market Equilibrium: A Structural Model," Journal of the European Economic Association, European Economic Association, vol. 15(6), pages 1214-1257.
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    8. H. Bunzel & Bent Jesper Christensen & Peter Jensen & Nicholas Kiefer & L. Korsholm & L. Muus & G. R. Neumann & Michael Rosholm, 2001. "Specification and Estimation of Equilibrium Search Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(1), pages 90-126, January.
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    Cited by:

    1. Fontaine, Idriss & Gálvez-Iniesta, Ismael & Gomes, Pedro & Vila-Martin, Diego, 2020. "Labour market flows: Accounting for the public sector," Labour Economics, Elsevier, vol. 62(C).
    2. Chassamboulli, Andri & Fontaine, Idriss & Gomes, Pedro, 2020. "How important are worker gross flows between public and private sector?," Economics Letters, Elsevier, vol. 192(C).
    3. Pedro Gomes & Zoe Kuehn, 2017. "Human capital and the size distribution of firms," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 164-179, October.
    4. 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).
    5. Girsberger, Esther Mirjam & Meango, Romuald, 2022. "The Puzzle of Educated Unemployment in West Africa," IZA Discussion Papers 15721, Institute of Labor Economics (IZA).
    6. Andri Chassamboulli & Pedro Gomes, 2018. "Meritocracy, Public-Sector Pay and Human Capital Accumulation," University of Cyprus Working Papers in Economics 08-2018, University of Cyprus Department of Economics.
    7. Robayo,Monica & Terskaya,Anastasia & Koettl-Brodmann,Stefanie, 2020. "Ex-ante Evaluation of the Impact of Increases in Minimum Wages on Labor Market Outcomes in Kosovo," Policy Research Working Paper Series 9357, The World Bank.
    8. Pascal Jacquinot & Matija Lozej & Massimiliano Pisani, 2018. "Labor Tax Reforms, Cross-Country Coordination, and the Monetary Policy Stance in the Euro Area: A Structural Model-Based Approach," International Journal of Central Banking, International Journal of Central Banking, vol. 14(3), pages 65-140, June.
    9. Guilherme Bandeira & Evi Pappa & Rana Sajedi & Eugenia Vella, 2018. "Fiscal Consolidation in a Low-Inflation Environment: Pay Cuts versus Lost Jobs," International Journal of Central Banking, International Journal of Central Banking, vol. 14(3), pages 7-52, June.
    10. Garibaldi, Pietro & Gomes, Pedro & Sopraseuth, Thepthida, 2021. "Public employment redux," Journal of Government and Economics, Elsevier, vol. 1(C).
    11. Cahuc, Pierre & Carcillo, Stéphane & Minea, Andreea & Valfort, Marie-Anne, 2019. "When Correspondence Studies Fail to Detect Hiring Discrimination," IZA Discussion Papers 12653, Institute of Labor Economics (IZA).
    12. Salazar-Saenz,Mauricio & Robayo,Monica, 2020. "A Structural Model of the Labor Market to Understand Gender Gaps among Marginalized Roma Communities," Policy Research Working Paper Series 9398, The World Bank.
    13. Jake Bradley & Fabien Postel-Vinay & Hélène Turon, 2017. "Public Sector Wage Policy and Labor Market Equilibrium: A Structural Model," Journal of the European Economic Association, European Economic Association, vol. 15(6), pages 1214-1257.
    14. Andri Chassamboulli & Pedro Gomes, 2019. "Public-Sector Employment, Wages and Human Capital Accumulation," University of Cyprus Working Papers in Economics 07-2019, University of Cyprus Department of Economics.
    15. Lucas Navarro & Mauricio Tejada, 2022. "Does Public Sector Employment Buffer the Minimum Wage Effects?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 43, pages 168-196, January.
    16. Geromichalos, Athanasios & Kospentaris, Ioannis, 2022. "The unintended consequences of meritocratic government hiring," European Economic Review, Elsevier, vol. 144(C).
    17. Boeing-Reicher, Claire A. & Caponi, Vincenzo, 2016. "Public Wages, Public Employment, and Business Cycle Volatility: Evidence from U.S. Metro Areas," IZA Discussion Papers 9965, Institute of Labor Economics (IZA).
    18. Jonathan Lain, 2019. "Discrimination in a search and matching model with self-employment," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-35, December.
    19. Pedro Gomes, 2018. "Heterogeneity And The Public Sector Wage Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1469-1489, August.
    20. Andri Chassamboulli & Pedro Gomes, 2021. "Jumping the queue: nepotism and public-sector pay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 344-366, January.
    21. Pedro Gomes & Zoe Kuehn, 2017. "Human capital and the size distribution of firms," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 164-179, October.
    22. Feng, Shuaizhang & Guo, Naijia, 2019. "Labor Market Dynamics in Urban China and the Role of the State Sector," IZA Discussion Papers 12170, Institute of Labor Economics (IZA).
    23. Andri Chassamboulli & Pedro Gomes, 2021. "Jumping the queue: nepotism and public-sector pay," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 344-366, January.
    24. Shuaizhang Feng & Naijia Guo, 2019. "Labor Market Dynamics in Urban China and the Role of the State Sector," Working Papers 2019-008, Human Capital and Economic Opportunity Working Group.
    25. Gomes, Pedro Maia & Wellschmied, Felix, 2020. "Public-Sector Compensation over the Life Cycle," IZA Discussion Papers 13042, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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