Government Employment and Wages and Labor Market Performance
Electronic Access:
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Summary:
Government wage, benefit, and employment decisions are not taken on a profit-maximizing basis and have a substantial impact on aggregate labor market performance and unemployment. In a two-sector labor market model with free mobility of labor, an increase in government wages or benefits reduces private sector employment, and government employment is not an effective counter-cyclical instrument. Empirical tests for Greece confirm that the expansion of the public sector in the 1980s contributed to the deterioration of labor market performance.
Series:
Working Paper No. 1999/055
Subject:
Employment Labor Labor markets Public employment Public sector wages Unemployment Wages
English
Publication Date:
April 1, 1999
ISBN/ISSN:
9781451847604/1018-5941
Stock No:
WPIEA0551999
Pages:
29
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