Public Enterprises and Labor Market Performance

22 Pages Posted: 11 Apr 2007

See all articles by Johannes Horner

Johannes Horner

Yale University - Cowles Foundation

Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics; Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Claudia Olivetti

Boston College; National Bureau of Economic Research (NBER)

Abstract

This article shows that state control of some industries may have contributed to the increase in European unemployment from the 1970s to the early 1990s. We develop a simple two-sector model, one privately run and one publicly run, that has risk-averse workers directing their search into one of the sectors. Assuming that the privately run sector is less able to insure its employees against uncertainty, we show that aggregate unemployment in this economy increases in response to an increase in economic turbulence.

Suggested Citation

Horner, Johannes and Ngai, Liwa Rachel and Olivetti, Claudia, Public Enterprises and Labor Market Performance. International Economic Review, Vol. 48, No. 2, pp. 363-384, May 2007. Available at SSRN: https://ssrn.com/abstract=979630 or http://dx.doi.org/10.1111/j.1468-2354.2007.00431.x

Johannes Horner

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Liwa Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 207 955 7017 (Phone)
+44 207 831 1840 (Fax)

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )

Clear Water Bay
Kowloon
Hong Kong

Claudia Olivetti (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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