Séminaire de recherche en économie - GATE-LSE : Jordi Jofre MonsenyPr. invité à l’UJM

Jordi Jofre Monseny, IEB présentera un séminaire intitulé : Local labor market effects of public employment

Thème de recherche / Main topics : Public economics, Urban economics

Jordi Jofre Monseny

Résumé / abstract  :
This paper quantifies the impact of public employment on local labor markets in the long-run. We follow two different quantitative approaches that we apply to the case of Spanish cities. In the first one, 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 then calibrate to match the labor market characteristics of the average Spanish city. Then, we use the model 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 1980-2001 period. The instrumental variables’ approach that we follow uses the capital status of cities to instrument for changes in public sector employment. The two empirical approaches yield qualitatively similar results and, thus, crosscheck each other. One public sector job creates about 1.3 additional jobs in the private sector. However, these new jobs do not translate into a substantial reduction of 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.


Co-auteurs/Joint work with  : José I. Silva, and Javier Vázquez-Grenno