TY  - RPRT
        AU  - Boeing-Reicher, Claire A.
AU  - Caponi, Vincenzo
        TI  - Public Wages, Public Employment, and Business Cycle Volatility: Evidence from U.S. Metro Areas
        PY  - 2016/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 9965
        UR  - https://www.iza.org/publications/dp9965
        AB  - Based on data from a cross section of U.S. metro areas, we show that public employment correlates negatively with business cycle volatility, hinting at a stabilizing effect of public employment, while public wages correlate weakly and positively with business cycle volatility, hinting at a destabilizing effect of public wages. To explain these relationships, we set up a search and matching model that contains a government sector and a role for government spending in product markets. This latter mechanism affects how the outside option behaves, and this mechanism can help a search and matching model to generate wage-reducing and stabilizing effects of public employment. Without this mechanism, a search and matching model cannot generate these effects.
        KW  - search and matching
KW  - crowding out
KW  - business cycle volatility
KW  - public wages
KW  - public employment
        ER  -