The effects of public sector employment on the economy

prosExpanding public sector employment can be an effective means of reducing unemployment in the short term, providing a stabilizing effect during recessions or in relatively disadvantaged regions.Public sector employment can create demand in other sectors of the economy (e.g.private services).Public sector employment supports equitable policies, such as encouraging employment of marginalized and/or disadvantaged groups. eLeVaToR piTcHPublic sector jobs are created because governments opt to provide goods and services produced directly by public employees.Governments, however, may also choose to regulate the size of the public sector in order to stabilize targeted national employment levels.However, economic research suggests that these effects are uncertain and critically depend on how public wages are determined.Rigid public sector wages lead to perverse effects on private employment, while flexible public wages lead to a stabilizing effect.Public employment also has important productivity and redistributive effects. The effects of public sector employment on the economyThe size and wage level of the public sector affect overall employment volatility and the economy