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Public Sector Wage Policy and Labor Market Equilibrium: A Structural Model

Bradley, Jake; Postel-Vinay, Fabien; Turon, Helene

Authors

JAKE BRADLEY Jake.Bradley@nottingham.ac.uk
Assistant Professor of Economics

Fabien Postel-Vinay

Helene Turon



Abstract

We develop and estimate a structural model that incorporates a sizable public sector in a labor market with search frictions. The wage distribution and the employment rate in the public sector are taken as exogenous policy parameters. Overall wage distribution and employment rate are determined within the model, taking into account the private sector’s endogenous response to public sector employment policies. Job turnover is sector specific and transitions between sectors depend on the worker’s decision to accept alternative employment in the same or different sector by comparing the value of employment in the current and prospective jobs. The model is estimated on British data by a method of moments. We use the model to simulate the impact of various counterfactual public sector wage and employment policies.

Journal Article Type Article
Publication Date Dec 1, 2017
Journal Journal of the European Economic Association
Print ISSN 1542-4766
Electronic ISSN 1542-4774
Publisher Oxford University Press
Peer Reviewed Peer Reviewed
Volume 15
Issue 6
Pages 1214-1257
APA6 Citation Bradley, J., Postel-Vinay, F., & Turon, H. (2017). Public Sector Wage Policy and Labor Market Equilibrium: A Structural Model. Journal of the European Economic Association, 15(6), 1214-1257. https://doi.org/10.1093/jeea/jvw026
DOI https://doi.org/10.1093/jeea/jvw026
Publisher URL https://academic.oup.com/jeea/article-abstract/doi/10.1093/jeea/jvw026/2995882/Public-Sector-Wage-Policy-and-Labor-Market?redirectedFrom=fulltext
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of the European Economic Association following peer review. The version of record Jake Bradley, Fabien Postel-Vinay, Hélène Turon; Public Sector Wage Policy and Labor Market Equilibrium: A Structural Model, Journal of the European Economic Association, jvw026 is available online at: https://academic.oup.co...edirectedFrom=fulltext.

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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