Public-Sector Employment, Wages and Human Capital Accumulation

Andri Chassamboulli and Pedro Gomes

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

Abstract: We set up a search and matching model with a private and a public sector to understand the effects of employment and wage policies in the public sector on unemployment and education decisions. The effects of wages and employment of skilled and unskilled public-sector workers on the educational composition of the labor force depend crucially on the structure of the labor market. An increase of skilled public-sector wages has a small positive impact on educational composition and larger negative impact on the private employment of skilled workers, if the two sectors are segmented. If search across the two sectors is random, it has a large positive impact on education and a large positive impact on skilled private employment. We highlight the usefulness of the model for policymakers by calculating the value of public-sector job security for skilled and unskilled workers.

Keywords: Public-sector employment; public-sector wages; unemployment; skilled workers; human capital accumulation, education decision, public-sector job security premium (search for similar items in EconPapers)
JEL-codes: E24 J31 J45 J64 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2019-04
New Economics Papers: this item is included in nep-dge, nep-lma, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:07-2019

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