Government Employment and Wages and Labour Market Performance
Oxford Bulletin of Economics & Statistics, Vol. 62, Issue 3, July 2000
Posted: 14 Jun 2001
Abstract
Government wage, benefit, and employment decisions are not taken on a profit-maximizing basis, and have a substantial impact on aggregate labour market performance and unemployment. In a two-sector labour market model with free mobility of labour, 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 labour market performance.
Suggested Citation: Suggested Citation
Demekas, Dimitri G. and Kontolemis, Zenon G., Government Employment and Wages and Labour Market Performance
. Oxford Bulletin of Economics & Statistics, Vol. 62, Issue 3, July 2000, Available at SSRN: https://ssrn.com/abstract=239251
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