The Impact of Wage-Setting Institutions on the Incidence of Public Employment in the OECD: 1960–1998



    1. Cornell University, CESifo and IZA
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      Cornell University, CESifo and IZA. E-mail: The author is a Professor of Labor Economics and Collective Bargaining at the School of Industrial and Labor Relations, Cornell University. The author thanks Francine D. Blau, Ronald Ehrenberg, Dan Mitchell, Michael Waldman, and two anonymous referees for helpful comments and suggestions and Katsuhide Yamashita for excellent research assistance.


Using data on seventeen Organization for Economic Cooperation and Development (OECD) countries for 1960–1998, this paper studies the impact of unions on public employment incidence, using macro- and microdata. Macrodata show that greater coverage by centralized collective bargaining institutions raises the public employment share, controlling for country effects and country-specific trends. Microdata show that this effect is more positive for outsiders: women, and younger and older men. Thus, government jobs may in effect partially counteract the employment problems these groups face in highly unionized societies.