Previous work that the Centre has done on the likely geography of public sector job losses has often prompted the question about the likely multiplied effect that this will have on the private sector. We haven’t been able to answer this question, but research released by SERC today suggests a way that we could do it.
SERC’s main finding is that over the period studied there was no (statistically significant) multiplier effect generated from public sector employment. In other words, one additional public sector job adds one job to the overall number of jobs.
Taking the research at face value, this would suggest that cutting a public sector job would also not have any amplified impact on the private sector (although it may have opposing effects on different parts of the private sector).
Unfortunately the only way to test this assumption will be to rerun the study some years down the line. But the SERC research does at least attempt to shed some light on an area where much is posited but little is actually known.
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