Does Slack Influence Public and Private Labor Market

Javier Pérez, Ana Lamo and Enrique Moral-Benito

No 8792, EcoMod2015 from EcoMod

Abstract: We analyze the impact of public employment and wages’ policies on private labor market outcomes, in particular taking due account of the state of the economy. The literature has stressed, on the one hand, the “crowding-out” of private employment by public employment and, on the other, the signalling effect of public wages over private sector wages. These channels may operate differently in recessions than in expansions, and in high-unemployment instances than in normal times. We account for this possibility by means of, first, non-linear STVAR models and, second, local projection methods. We focus on Spanish and euro area aggregate data. Our results show that indeed allowing different reactions in different states of the economy is crucial for understanding the labor market impact of public employment and wages’ policy actions. In particular, we find that the degree of unemployment slack is key to determine if public employment crowds-out or crowds-in private employment. See above See above

Keywords: Spain and euro area; Labor market issues; Labor market issues (search for similar items in EconPapers)
Date: 2015-07-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://ecomod.net/system/files/Ng_labor_mkt_effects.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ekd:008007:8792

Access Statistics for this paper

More papers in EcoMod2015 from EcoMod Contact information at EDIRC.
Bibliographic data for series maintained by Theresa Leary ().