This second volume of a three-volume report of the National Commission for Manpower Policy on Public Service Employment (PSE) contains the interim report of the Brookings Institution to the Commission based on their onsite monitoring of the program. The report is divided into seven chapters. Chapter 1 provides an overview of the report, and chapter 2 presents a brief history of PSE programs. Chapter 3 discusses employment effects. (An understanding of the definitions of job creation and displacement used in this chapter is crucial to the interpretation of the extent of displacement found in this study.) Chapter 4 examines the fiscal consequences of the PSE program for governmental jurisdictions participating in it. Chapter 5 addresses the programmatic and social effects of the program and includes an analysis of the functional areas in which PSE participants are employed, their occupations, social characteristics, and wages. The political effects of PSE are examined in chapter 6, which describes the organization and administration of the program at the local level. Finally, chapter 7 discusses the policy implications of the current findings. Appended are excerpts from the transcript of the mid-study conference for field search associates and the first-round analysis form. (BM)