Becker, Sascha O., Heblich, Stephan and Sturm, Daniel M. (2018) The impact of public employment : evidence from Bonn. Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series (WERPS) (1146). (Unpublished)
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Abstract
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.
| Item Type: | Working or Discussion Paper (Working Paper) |
|---|---|
| Subjects: | H Social Sciences > HJ Public Finance |
| Divisions: | Faculty of Social Sciences > Economics |
| Library of Congress Subject Headings (LCSH): | Crowding out (Economics), Economic geography, Public service employment -- Germany, Bonn (Germany) -- Economic conditions -- History |
| Series Name: | Warwick economics research papers series (WERPS) |
| Publisher: | University of Warwick. Department of Economics |
| Place of Publication: | Coventry |
| ISSN: | 0083-7350 |
| Official Date: | January 2018 |
| Dates: | Date Event January 2018 Published |
| Number: | 1146 |
| Number of Pages: | 44 |
| Institution: | University of Warwick |
| Status: | Not Peer Reviewed |
| Publication Status: | Unpublished |
| Access rights to Published version: | Open Access (Creative Commons open licence) |
| Description: | This paper also appears as CAGE Discussion Paper No: 354 |
| RIOXX Funder/Project Grant: | Project/Grant ID RIOXX Funder Name Funder ID |
| URI: | https://wrap.warwick.ac.uk/97424/ |
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