The Hidden Costs of Government Shutdowns

53 Pages Posted: 14 Nov 2021 Last revised: 29 Nov 2021

See all articles by Christoph Herpfer

Christoph Herpfer

Emory University - Goizueta Business School

Gonzalo Maturana

Emory University - Goizueta Business School

Andrew Teodorescu

New York University (NYU) - Department of Finance

Date Written: November 29, 2021

Abstract

Government bureaus with higher percentages of furloughed employees during the 2013 government shutdown experienced more employee turnover for two years after the shutdown. This lost workforce was not replenished after employee exits stabilize, at least not within four years after the shutdown. We find that younger employees are more likely to quit, while more experienced employees who receive higher pay are more likely to retire. Affected bureaus react by outsourcing more of their activities. Moreover, their accounting processing and patent creation capabilities decrease, which is consistent with the shutdown eliminating valuable human capital and decreasing government productivity.

Keywords: government shutdowns, furloughs, government productivity

JEL Classification: J21, J24, J45, J63

Suggested Citation

Herpfer, Christoph and Maturana, Gonzalo and Teodorescu, Andrew, The Hidden Costs of Government Shutdowns (November 29, 2021). Available at SSRN: https://ssrn.com/abstract=3962279 or http://dx.doi.org/10.2139/ssrn.3962279

Christoph Herpfer (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

Gonzalo Maturana

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

HOME PAGE: http://www.gonzalomaturana.com/

Andrew Teodorescu

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States

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