Are Recessions Good for Government Hires? The Effect of Unemployment on Public Sector Human Capital
Utilizing a large dataset on U.S. federal government employees covering 24 years, we estimate and analyze the persistent wage effect of entering government employment during recessions for recent college graduates and other new employees. Contrary to previous results in the literature for private sector employees, we document a significant and long-term wage increase for federal civil servants who enter government service in recessions. We show this result is robust to alternative samples and model specifications. We conclude by examining agency occupation composition and job matching as mechanisms for these results.
The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. This work was supported by National Science Foundation Grant Numbers 1061600 and 1443014; and the Smith Richardson Foundation. The authors would like to thank Alexander Bolton, Lisa Kahn, David Lewis, Christos Makridis, Philip Oreopoulos and seminar participants at Northwestern University, Kellogg School of Management; Duke University Conference on Analyzing Federal Personnel Data; and the Annual Meetings of the Society for Institutional and Organizational Economics, for their insightful comments.
Zhang, Congshang, and John M. de Figueiredo (2018). “Are Recessions Good for Government Hires? The Effect of Unemployment on Public Sector Human Capital,” Economics Letters 170: 1-5.