The effect of public sector employment on local labour markets

Giulia Faggio and Henry Overman

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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: 2013-05-31
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Citations: View citations in EconPapers (3)

Published in Journal of Urban Economics, 31, May, 2013, 79, pp. 91-107. ISSN: 0094-1190

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http://eprints.lse.ac.uk/50482/ Open access version. (application/pdf)

Related works:
Journal Article: The effect of public sector employment on local labour markets (2014)
Working Paper: The Effect of Public Sector Employment on Local Labour Markets (2012)
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