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The effect of public sector employment on local labour markets

Giulia Faggio () and Henry Overman ()

Journal of Urban Economics, 2014, vol. 79, issue C, 91-107

Abstract: This paper considers the impact of public sector employment on local labour markets. Using English data at the Local Authority level for 2003–2007 we find that public sector employment has no identifiable effect on total private sector employment. However, public sector employment does affect the sectoral composition of the private sector. Specifically, each additional public sector job creates 0.5 jobs in the non-tradable sector (construction and services) while crowding out 0.4 jobs in the tradable sector (manufacturing). When using data for a longer time period (1999–2007) we find no multiplier effect for non-tradables, stronger crowding out for tradables and, consistent with this, crowding out for total private sector employment.

Keywords: Local labour markets; Public and private sector employment; Wages (search for similar items in EconPapers)
JEL-codes: H70 R12 (search for similar items in EconPapers)
Date: 2014
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Working Paper: The Effect of Public Sector Employment on Local Labour Markets (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:79:y:2014:i:c:p:91-107

DOI: 10.1016/j.jue.2013.05.002

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