Labour market flows: Accounting for the public sector

an article by Idriss Fontaine (Université de La Réunion, France, Ismael Gálvez-Iniesta (Universidad Carlos III de Madrid, Spain), Pedro Gomes (Birkbeck, University of London, UK) and Diego Vila-Martin (European Central Bank, Frankfurt am Main, Germany) published in Labour Economics Volume 62 (January 2020)

Highlights

• The French, Spanish, UK and US public sectors represent 16 to 23% of total employment.
• Public sectors hire predominantly college graduates, women and older workers.
• The probability of a worker losing his job is 2–3 times higher in the private sector.
• Job security in the public sector is worth 0.5 to 2.9% of the wage.
• Public-sector employment explains 10 to 20% of the fluctuations of unemployment.

Abstract

For the period between 2003 and 2018, we document a number of facts about worker gross flows in France, the United Kingdom, Spain and the United States, focusing on the role of the public sector.

Using the French, Spanish and UK Labour Force Survey and the US Current Population Survey data, we examine the size and cyclicality of the flows and transition probabilities between private and public employment, unemployment and inactivity.

We examine the stocks and flows by gender, age and education. We decompose contributions of private and public job-finding and job-separation rates to fluctuations in the unemployment rate.

Public-sector employment contributes 20 percent to fluctuations in the unemployment rate in the UK, 15 percent in France and 10 percent in Spain and the US.

Private-sector workers would forgo 0.5 to 2.9 percent of their wage to have the same job security as public-sector workers.

JEL classification: E24, E32 J21, J45 J60

Full text (PDF 13pp)

Labels:
worker_gross_flows, job-finding_rate, job-separation_rate, public_sector, public-sector_employment,

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