Javier Vázquez-Grenno (Universitat de Barcelona).
En coautoría con Jordi Jofre-Monseny y José I. Silva
(Universitat de Barcelona)
"Local labor market effects of public employment"
Comenta: Rodrigo Ceni (IECON)
Jueves 1 de setiembre Hora 15:00.
Sala de reuniones del IECON. Requena 1375
Abstrac
This paper quantifies the impact of public employment on local labor
markets in the long-run. We adopt two quantitative approaches and apply
them to the case of Spanish cities. In the first, we develop a 3-sector
(public, tradable and non-tradable) search and matching model embedded
within a spatial equilibrium model. We characterize the steady
state of the model, which we calibrate to match the labor market
characteristics of the average Spanish city. The model is then used to
simulate the local labor market effects of expanding
public sector employment. In the second empirical approach, we use
regression analysis to estimate the effects of public sector job
expansions on decadal changes (1980-1990 and 1990-2001) in the employment
and population of Spanish cities. This analysis
exploits the dramatic expansion of public employment that followed the
advent of democracy in the period 1980 to 2001. The instrumental
variables’ approach thatwe adopt uses the capital status of cities to
instrument for changes in public sector employment. The two empirical
approaches yield qualitatively similar results and, thus, cross-check each
other. One additional public sector job creates about 1.3 jobs in the
private sector. However, these new jobs do not translate into a
substantial reduction in the local unemployment rate as better
labor market conditions attract new workers to the city. Increasing public
employment by 50% only reduces unemployment from 0.156 to 0.150.
Keywords: public employment, search, local multipliers, unemployment