Public Employment and the Business Cycle
20 Pages Posted: 29 Feb 2008
Abstract
We add a public employment sector to the basic search and matching model in order to study the business cycle impact of public wage and employment policies. The government is assumed to follow exogenous rules for public wages and employment calibrated to match some cyclical features of US policies. These features include a positive public wage premium and mildly procyclical public wages and employment. We find that the presence of the public sector increases the volatility of employment and output.
Keywords: Job search, public employment, business cycle
JEL Classification: E6, E32, J64
Suggested Citation: Suggested Citation
Vincenzo Quadrini (Contact Author)
University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )
Marshall School of Business
Los Angeles, CA 90089
United States
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Public Employment and the Business Cycle
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