Macroeconomic effects of public-sector unions

Aleksandar Vasilev

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Abstract: Motivated by the highly-unionized public sectors, the high public shares in total employment, and the public-sector wage premia observed in Europe, this paper examines the importance of public-sector unions for macroeconomic theory. The model generates cyclical behavior in hours and wages that is consistent with data behavior in an economy with highly-unionized public sector, namely Germany during the period 1970-2007. The union model is an improvement over a model with exogenous public employment. In addition, endogenously-determined public wage and hours add to the distortionary effect of contractionary tax reforms by generating greater tax rate changes, thus producing higher welfare losses.

Keywords: public sector labor unions; fiscal policy; public wages; public employment (search for similar items in EconPapers)
JEL-codes: E62 J51 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cse, nep-dge and nep-mac
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Citations: View citations in EconPapers (10)

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https://www.econstor.eu/bitstream/10419/144529/1/AV_public_sector_unions_WP.pdf (application/pdf)

Related works:
Journal Article: Macroeconomic Effects of Public-Sector Unions (2015)
Journal Article: Macroeconomic effects of public-sector unions (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:144529

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