Sascha O. Becker, Stephan Heblich, Daniel Sturm, 03 November 2020

Raising the level of public employment is a frequently used policy instrument to support economically lagging regions. This column evaluates the impact of changes in public employment on private sector activity using the creation of the West German government in Bonn as a source of exogenous variation. It finds that relative to a control group of cities, public employment increased substantially in Bonn, but this led to only a modest increase in private sector employment. This suggests that public sector jobs may not be a magic bullet to kickstart local economies.

Haris Tabakovic, Thomas Wollmann, 13 September 2018

When public sector employees end up working for the private firms which they monitored, regulated, and even disciplined, a clear conflict of interest arises. However, little is known about the the scale and scope of this ‘revolving door’ problem. This column presents evidence from patent examiners employed by the US Patent and Trademark Office, and shows that examiners grant considerably more patents to the firms that ultimately hire them, and that the most likely explanation is that examiners are ‘captured’. This leniency lowers the quality of patents coming out of the agency. 

Minouche Shafik, 11 December 2017

Firms operating in fragile states face unique conditions. In this video, Minouche Shafik explains why the private sector is vital for the recovery of fragile states. This video was recorded at the International Growth Centre in October 2017.

S. M. Ali Abbas, Daniel Hardy, Jun Kim, Alex Pienkowski, 06 June 2017

The theoretical benefits of state-contingent debt instruments for sovereigns – such as GDP-linked and extendible bonds – have been advocated by academics for several decades, but only recently have the practical constraints and considerations been explored in detail. This column summarises this more recent work, highlighting key findings on instrument design and on broader market development prospects. 

Masayuki Morikawa, 23 November 2014

The appropriate level of public sector wages is debated frequently in every country, and the debate has intensified in the wake of the global financial crisis. This column presents evidence that regional wage differentials in Japan are greater in the private sector than in the public sector. In regions where public sector wages are relatively high, skilled individuals may self-select into public sector jobs. At the same time, public sector employers in metropolitan regions such as Tokyo may have difficulty in hiring high quality employees.

Benedicta Marzinotto, Alessandro Turrini, 05 September 2014

The link between public- and private-sector compensation has important implications for the labour market and price competitiveness. This column reports that manufacturing and government wages co-move both in the long and short run, but that the long-run co-movement is much stronger where the government is an important employer. This co-movement tends to break down during fiscal consolidation periods, except in large-government countries. Moreover, manufacturing wages exhibit a stronger co-movement with productivity in countries where government wages are set via collective bargaining. 

Betty Daniel, 01 July 2012

What causes financial crises in emerging markets? This column looks at the effect of risky investments in South Korea on the Asian financial crisis of the late 1990s.

CEPR Policy Research