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Macroeconomic effects of shocks to public employment

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  • Linnemann, Ludger

Abstract

The paper discusses the short-run relation between public and private employment. Empirical evidence is presented suggesting that in aggregate US time series, increases in government employment appear to generate temporarily positive responses of private employment and real output. Unlike in the case of shocks to government spending on goods, this contradicts the predictions of business cycle models based on the neoclassical growth model. It is explored in how far a model which includes the production of useful public services can potentially explain the qualitative properties of the evidence.

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  • Linnemann, Ludger, 2009. "Macroeconomic effects of shocks to public employment," Journal of Macroeconomics, Elsevier, vol. 31(2), pages 252-267, June.
    • Handle: RePEc:eee:jmacro:v:31:y:2009:i:2:p:252-267
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    7. Lamo, Ana & Pérez, Javier J. & Schuknecht, Ludger, 2013. "Are government wages interlinked with private sector wages?," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 697-712.
    8. Aleksandar Vasilev, 2013. "On the cost of rent-seeking by government bureaucrats in a Real-Business-Cycle framework," Working Papers 2013_20, Business School - Economics, University of Glasgow.
    9. Aleksandar Vasilev, 2015. "Macroeconomic Effects of Public-Sector Unions," LABOUR, CEIS, vol. 29(2), pages 101-126, June.
    10. Aleksandar Vasilev, 2016. "Aggregation with a double non-convex labor supply decision: indivisible private- and public-sector hours," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 47.
    11. Steinar Holden & Victoria Sparrman, 2018. "Do Government Purchases Affect Unemployment?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(1), pages 124-158, January.
    12. Vasilev, Aleksandar, 2013. "Fiscal policy in a Real-Business-Cycle model with labor-intensive government services and endogenous public sector wages and hours," EconStor Preprints 142338, ZBW - Leibniz Information Centre for Economics.
    13. Bermperoglou, Dimitrios & Pappa, Evi & Vella, Eugenia, 2017. "The government wage bill and private activity," Journal of Economic Dynamics and Control, Elsevier, vol. 79(C), pages 21-47.
    14. Aleksandar Vasilev, 2013. "Cyclical and welfare effects of public sector unions in a Real-Business-Cycle model," Working Papers 2013_19, Business School - Economics, University of Glasgow.
    15. George Economides & Apostolis Philippopoulos & Petros Varthalitis, 2015. "Incentives to Work and Performance in the Public Sector," CESifo Working Paper Series 5193, CESifo.
    16. Pedro Gomes, 2009. "Labour market effects of public sector employment and wages," 2009 Meeting Papers 313, Society for Economic Dynamics.
    17. Vasilev, Aleksandar, 2013. "Essays on Real Business Cycle Modeling and the Public Sector," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 130522, January.
    18. Eduardo Garzón Espinosa & Bibiana Medialdea García & Esteban Cruz Hidalgo, 2021. "Fiscal Policy Approaches: An Inquiring Look From The Modern Monetary Theory," Journal of Economic Issues, Taylor & Francis Journals, vol. 55(4), pages 999-1022, October.
    19. Attinasi, Maria Grazia & Berardini, Francesco & Palazzo, Alessandra Anna, 2019. "Do public wages in the euro area explain private wage developments? An empirical investigation," Working Paper Series 2231, European Central Bank.

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