Is It Still a Lifetime Relationship? the Job Stability of Public Sector Labor Markets Entrants in Germany in Times of Reforms, Privatization, and New Public Management. – a Cohort Perspective

The public sector is associated with a reduction in social inequality. It offers stable, well paid jobs for risk groups, reduces economic inequalities, and provides protection of market powers. This paper answers the question if also the risk group of labor market entrants can benefit in terms of stable starting positions for their career. Labor market entrants face a greater risk of insecure employment, are typical outsiders, and not a part of the internal labor market. On the other hand, the public sector is associated with stable employment, internal labor markets, and an insider labor market. So far it is unclear as to what extent the public sector offers also stable starting positions for entrants as well as if and how the stability of the entry position has changed over the cohorts due to major transformations that took place in the German public sector. Huge state-owned enterprises were privatized and new public management challenged the bureaucratic paradigm. This paper identifies the characteristics of public sector employment that should increase the stability of entry positions and tests them empirically in a mediation analyses with six mechanisms. It allows the differentiation between the supply of high occupational status jobs and the institutional setting to answer the question which mechanism drives the effect of public sector stability. Stepwise multivariate discrete event history analyses with a piece-wise-constant specification for the labor market entry cohorts 1960-2009 are calculated, based on the German National Educational Panel Study (NEPS). NEPS offers rich retrospective spell data which allows controlling for several important influences and reducing selection bias. Initial findings show, over the cohorts, the composition of the public sector experienced an increase of high occupational status jobs that balance the weakening of the institutional setting advantages. Overall, the public sector still provides stable entry positions for entrants.