This paper provides a critical survey of the literature dealing with public sector labor markets. It discusses the research by economists on wage determination in the state and local sector (including the effects of. unions), on the estimation of compensating wage differentials for pecuniary and nonpecuniary job characteristics, on the effects of unions on productivity, on the estimation of public sector demand and for labor functions, on dispute resolution, on public/private pay differentials, and on gender and race discrimination in the public sector. Numerous suggestions for future research are offered.