Public-Sector Employment in an Equilibrium Search and Matching Model
38 Pages Posted: 22 Jan 2017
Date Written: January 2017
We extend the Diamond-Mortensen-Pissarides model of equilibrium unemployment to incorporate public-sector employment. We calibrate our model to Colombian data and analyze the effects of public-sector wage and employment policy on the unemployment rate, on the division of employment between the private and public sectors, and on the distributions of wages in the two sectors.
Keywords: public sector, search and matching, wages, unemployment
JEL Classification: J45, J64, D83
Suggested Citation: Suggested Citation