This article analyzes the impact of public employee unionism and the interdependency among different levels of government on the demand for state and local government employees. The evidence suggests that highly organized public employees exert enough political pressure to alter the terms and conditions of employment. The interdependency among different levels of government indicates that employment decisions at one level of government are related to employment decisions of other governments serving the same population. Thus, although services provided to a given population come from different political jurisdictions, these jurisdictions complement each other in providing the service. The results suggest that both market and nonmarket forces affect state and local governments' employment portfolio. Consequently, consideration should be given to both collective bargaining and the political process in analyzing the demand for public employees.
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