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The Regional Distribution of Public Employment: Theory and Evidence

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  • Kessing, Sebastian G.

    ()
    (University of Siegen)

  • Strozzi, Chiara

    ()
    (University of Modena and Reggio Emilia)

Abstract

We analyze the optimal regional pattern of public employment in an information-constrained second-best redistribution policy showing that regionally differentiated public employment can serve as an expenditure side tagging device, bypassing or relaxing the equity-efficiency trade-off. The optimal pattern exhibits higher levels of public employment in low productivity regions and is more pronounced the higher is the degree of regional inequality within the country. Empirically, using a panel of European regions from 1995-2007, we find evidence that public employment is systematically higher in low productivity regions. The latter effect is stronger in countries with higher levels of regional inequality.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6449.

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Length: 25 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6449

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Keywords: public employment; redistribution; regional inequality; European regions;

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  1. Wilson, John D., 1982. "The optimal public employment policy," Journal of Public Economics, Elsevier, Elsevier, vol. 17(2), pages 241-258, March.
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  3. Marina Murat & Barbara Pistoresi, 2006. "Emigrants and immigrants networks in FDI," Department of Economics, University of Modena and Reggio E., Faculty of Economics "Marco Biagi" 0546, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
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