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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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    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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