Are Public Sector Jobs Recession-Proof? Were They Ever?
We use data from the Displaced Worker Survey supplements of the Current Population Survey from 1984 to 2012 to investigate the differences in job loss rates between workers in the public and private sectors. Our focus is on the extent to which recessions affect the differential between job loss rates in the two sectors.
Our main findings include the following: First, taking into account differences in characteristics among workers does not eliminate sectoral differences in the likelihood of losing one’s job. After accounting for worker characteristics, during both recessionary and non-recessionary periods, the probability of job loss is higher for private sector workers than for public sector workers at all levels of government. Second, the probability of displacement for private sector workers increased during both the Great Recession and earlier recessions during our sample period. Third, it is less straightforward to characterize the experience of public sector workers during recessions. Job loss rates sometimes increased and sometimes decreased, depending on whether the employer was the federal, state, or local government. The impact of the Great Recession on displacement rates for public sector employees was somewhat different from that in previous recessions. Fourth, the advantage of public sector employment in terms of job loss rates generally increased during recessions for all groups of public sector workers.
Thus, the answer to the question posed in the title is that public sector jobs, while not generally recession-proof, do offer more security than private sector jobs, and the advantage widens during recessions. These patterns are present across genders, races, and educational groups.
We thank Henry Farber for providing us with the data that were used in this study and two referees for useful comments. Financial support from Princeton’s Griswold Center for Economic Policy Studies is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
J. L. Kopelman & H. S. Rosen, 2016. "Are Public Sector Jobs Recession-proof? Were They Ever?," Public Finance Review, vol 44(3), pages 370-396.