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CEP discussion paper
Public Enterprises and Labor Market Performance
Johannes Hörner, L. Rachel Ngai and Claudia Olivetti
January 2004
Paper No' CEPDP0610:
Full Paper (pdf)

JEL Classification: E240; J450; J640

Tags: european unemployment; public sector employment

This paper shows that state control of some industries may have contributed to the increase in European unemployment from the 1970s to the early 1990s. We develop a simple model with both publicly-run and privately-run enterprises and show that when economic turbulence increases, higher unemployment rates may result in economies that have a larger public sector.