The effects of grants and wages on municipal labour demand
2004 (English)In: Labour Economics, ISSN 0927-5371, Vol. 11, no 3, 315-334 p.Article in journal (Refereed) Published
In this paper we investigate the determinants of municipal labour demand in Sweden 1988–1995. Utilising a major grant reform in 1993, through which a switch from mainly targeted to mainly general central government grants occurred, we are able to identify which type of grants that have the largest effects on municipal employment. We find a larger municipal employment elasticity with respect to grants before the reform, which we interpret as evidence that general grants have less employment effects than specific ones. We further find a short run wage elasticity of approximately -0.5 and a long run ditto of approximately -0.9, and a quite sluggish adjustment process: only 60% of the desired change in municipal employment is implemented in the first year.
Place, publisher, year, edition, pages
2004. Vol. 11, no 3, 315-334 p.
municipal labour demand, panel data, median voter
IdentifiersURN: urn:nbn:se:uu:diva-68543DOI: 10.1016/j.labeco.2003.07.003OAI: oai:DiVA.org:uu-68543DiVA: diva2:96454