The impact of public employment : evidence from Bonn / Sascha O. Becker (University of Warwick, CAGE, CEPR and IZA), Stephan Heblich (University of Bristol, IZA and SERC), Daniel M. Sturm (London School of Economics and CEPR) ; IZA Institute of Labor Economics
VerfasserBecker, Sascha O. In der Gemeinsamen Normdatei der DNB nachschlagen ; Heblich, Stephan In der Gemeinsamen Normdatei der DNB nachschlagen ; Sturm, Daniel In der Gemeinsamen Normdatei der DNB nachschlagen
KörperschaftForschungsinstitut zur Zukunft der Arbeit In der Gemeinsamen Normdatei der DNB nachschlagen
ErschienenBonn, Germany : IZA Institute of Labor Economics, January 2018
Elektronische Ressource
Umfang1 Online-Ressource (44 Seiten) : Diagramme, Karten
SerieDiscussion paper ; no. 11255
URNurn:nbn:de:hbz:5:2-145985 Persistent Identifier (URN)
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The impact of public employment [2.34 mb]
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This paper evaluates the impact of public employment on private sector activity using the relocation of the German federal government from Berlin to Bonn in the wake of the Second World War as a source of exogenous variation. To guide our empirical analysis, we develop a simple economic geography model in which public sector employment in a city can crowd out private employment through higher wages and house prices, but also generates potential productivity and amenity spillovers. We find that relative to a control group of cities, Bonn experiences a substantial increase in public employment. However, this results in only modest increases in private sector employment with each additional public sector job destroying around 0.2 jobs in industries and creating just over one additional job in other parts of the private sector. We show how this finding can be explained by our model and provide several pieces of evidence for the mechanisms emphasised by the model.