What Determines the Size of Public Employment? An Empirical Investigation

42 Pages Posted: 7 Aug 2019

See all articles by Santiago Herrera

Santiago Herrera

World Bank

Ercio Munoz

City University of New York (CUNY), The Graduate Center, Department of Economics

Date Written: August 6, 2019

Abstract

This paper explores the determinants of public employment across the world and finds that it is negatively associated with country size (by population) and positively associated with the income level. The findings show that a country's openness to trade is positively associated with public employment in low- and middle-income countries, but inversely related in high-income countries. The estimated models are used to predict the expected public employment for a country given its income, population, and openness to trade, and to compare the actual levels with the predicted ones. In general, public employment in Latin American countries is below the predicted levels, except for Argentina, Brazil, Ecuador, Mexico, Suriname, Trinidad and Tobago, and the Rep?blica Bolivariana de Venezuela. Public employment in the Middle East and North Africa is above the predicted levels, particularly in the Arab Republic of Egypt and the Islamic Republic of Iran. East Asian and Pacific countries' public employment is significantly below the predicted levels, particularly in Hong Kong SAR, China; Japan; the Republic of Korea; and Mongolia. Countries in Europe and Central Asia show higher than predicted public employment, mostly in Romania, Denmark, Sweden, Armenia, and Belorussia. Public employment in Sub-Saharan Africa appears to be below the predicted levels, with the notable exceptions of Botswana and South Africa. The deviations from predicted levels are positively correlated with the union density rate, which is negatively associated with private employment rates. Finally, the study finds no statistical association between public and private employment, suggesting the absence of crowding-out in the employment levels.

Keywords: International Trade and Trade Rules, Public Sector Administrative and Civil Service Reform, Democratic Government, Public Sector Administrative & Civil Service Reform, Administrative & Civil Service Reform, De Facto Governments, Employment and Unemployment

Suggested Citation

Herrera, Santiago and Munoz, Ercio, What Determines the Size of Public Employment? An Empirical Investigation (August 6, 2019). World Bank Policy Research Working Paper No. 8961. Available at SSRN: https://ssrn.com/abstract=3433468

Santiago Herrera (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Ercio Munoz

City University of New York (CUNY), The Graduate Center, Department of Economics ( email )

365 Fifth Avenue, 5th Floor
New York, NY 10016
United States

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