ECB paper explores public and private employment link
Research advises against ‘aggressive polices’ when unemployment is high
A working paper published by the European Central Bank (ECB) has advised against "aggressive" policies of firing public employees in the midst of a recession or when unemployment is high.
In Does slack influence public and private labour market interactions?, Ana Lamo, Enrique Moral-Benito and Javier Pérez analyse the impact of public employment and wage shocks on private labour market outcomes. They study both Spain and the eurozone as a whole.
"In expansions, public employment may crowd out
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