Thursday, July 22, 2010

Adding insult to injury - Adding government workers destroys private jobs

Not only are government workers vastly more expensive and less productive, evidently the act of merely adding them to the workforce destroys private sector jobs with a net loss of jobs.  Thus adding public 'servants' (Ha!) is a trifecta bummer:  a waste of money, they meddle and boss people around and they destroy real jobs producing real wealth  Wow, that's a lot of suckage.  Veronique de Rugy has more:

In this paper, published in Economic Policy Journal, economists Yann Algan, Pierre Cahuc, and Andre Zylberberg looked at the impact of public employment on overall labor-market performance. The authors use data for a sample of OECD countries from 1960 to 2000, and they find that, on average, the creation of 100 public jobs eliminated about 150 private-sector jobs, decreased overall labor-market participation slightly, and increased by about 33 the number of unemployed workers.
Their explanation is that public employment crowds out private employment and increases overall unemployment by offering comparatively attractive working conditions. Basically, public jobs that offer higher wages, require low effort, and offer attractive fringe benefits attract many workers and crowd out private jobs. This is especially true when the public jobs exist in the private sector (transportation and education, for instance). The impact is bigger when these new employees are paid with new taxes.

No comments:

Post a Comment