{
  "title": "Fiscal Policy Implications for Labor Market Outcomes in Middle-Income Countries",
  "publication": "IMF Working Papers, January 23, 2015",
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  "summary": "Many governments have initiated public employment programs or expanded the existing ones in response to high unemployment. However, in many middle-income countries, a relatively large government coexists with persistently high unemployment.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Many governments have initiated public employment programs or expanded the existing ones in response to high unemployment.\n- In many middle-income countries, a relatively large government coexists with persistently high unemployment.\n- This paper explores whether public employment gives rise to distortions in the labor market in the medium to long-run.\n- The authors report that their findings do not provide any evidence that public employment reduces the unemployment rate.\n- The analysis shows that large public employment significantly affects labor market outcomes in middle-income countries and leads to job destruction in the private sector.\n- The extent of the impact is largely influenced by:\n  - the degree of substitutability between public and private production, and\n  - the size of the rents in the public sector."
    },
    {
      "heading": "Key Findings and Mechanisms",
      "content": "- No evidence that public employment reduces the unemployment rate.\n- Large public employment can cause job destruction in the private sector.\n- Impact channels identified:\n  - Substitutability between public and private production (higher substitutability increases crowding-out).\n  - Size of rents in the public sector (larger rents amplify distortions)."
    },
    {
      "heading": "Policy Implications (inferred from analysis)",
      "content": "- Public employment expansion can have unintended negative effects on private-sector employment in middle-income countries when public and private outputs are substitutable.\n- The design of public employment programs should consider:\n  - the degree of substitutability with private production, and\n  - measures to limit rents in the public sector to reduce crowding-out effects."
    },
    {
      "heading": "Subject Areas and Keywords",
      "content": "- Subject: Economic sectors; Employment; Labor; Labor markets; Public employment; Public sector; Unemployment\n- Keywords: Africa; crowding-out effect; Employment; employment opportunity; labor market; Labor markets; private employment; private sector; private-sector job; public and private employment; public employment; Public employment; Public sector; representative private-sector firm; Unemployment; unemployment rate; wage premium; WP\n\n---\n\n Content in this bundle\n\n- wp1517\n  - wp1517 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1517 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/fiscal-policy-implications-for-labor-market-outcomes-in-middle-income-countries-42626"
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    "Authors: Ara Stepanyan, Lamin Y Leigh",
    "Published: January 23, 2015",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484326800.001",
    "Many governments have initiated public employment programs or expanded the existing ones in response to high unemployment.",
    "In many middle-income countries, a relatively large government coexists with persistently high unemployment.",
    "This paper explores whether public employment gives rise to distortions in the labor market in the medium to long-run.",
    "The authors report that their findings do not provide any evidence that public employment reduces the unemployment rate.",
    "The analysis shows that large public employment significantly affects labor market outcomes in middle-income countries and leads to job destruction in the private sector.",
    "The extent of the impact is largely influenced by:",
    "No evidence that public employment reduces the unemployment rate.",
    "Large public employment can cause job destruction in the private sector.",
    "Impact channels identified:",
    "Public employment expansion can have unintended negative effects on private-sector employment in middle-income countries when public and private outputs are substitutable.",
    "The design of public employment programs should consider:",
    "Subject: Economic sectors; Employment; Labor; Labor markets; Public employment; Public sector; Unemployment",
    "Keywords: Africa; crowding-out effect; Employment; employment opportunity; labor market; Labor markets; private employment; private sector; private-sector job; public and private employment; public employment; Public employment; Public sector; representative private-sector firm; Unemployment; unemployment rate; wage premium; WP",
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