Public jobs creation and unemployment dynamics

Céline Choulet ()
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Céline Choulet: Centre d'Economie de la Sorbonne, http://eurequa.univ-paris1.fr

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: 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

Keywords: Public sector labor market; unemployment dynamics (search for similar items in EconPapers)
JEL-codes: J21 J45 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2006-03
New Economics Papers: this item is included in nep-dge, nep-lab, nep-mac and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:mse:wpsorb:v06026

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