We quantify the extent to which public-sector employment crowds out privatesector employment using specially assembled datasets for a large cross-section of developing and advanced countries, and discuss the implications for countries in the Middle East, North Africa, Caucasus and Central Asia. These countries simultaneously display high unemployment rates, low private-sector employment rates and high proportions of government-sector employment. Regressions of unemployment rates on public-sector employment point to full crowding out. This means that high rates of public employment, which incur substantial fiscal costs, do not reduce overall unemployment rates.
Topics in Middle Eastern and North African Economies, electronic journal, Volume 17, Middle East Economic Association and Loyola University Chicago, September, 2015, http://www.luc.edu/orgs/meea/
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