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The Regional Distribution of Public Employment: Theory and Evidence

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  • Sebastian Kessing

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  • Chiara Strozzi

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Abstract

We analyze the optimal regional pattern of public employment in an information-constrained econd-best redistribution policy showing that regionally differentiated public employment can serve as an expenditure side tagging device, bypassing or relaxing the equity-effciency 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 University of Modena and Reggio E., Faculty of Economics "Marco Biagi" in its series Department of Economics with number 0682.

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Length: pages 27
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:mod:depeco:0682

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

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  1. Jaimovich, Esteban & Rud, Juan Pablo, 2014. "Excessive public employment and rent-seeking traps," Journal of Development Economics, Elsevier, vol. 106(C), pages 144-155.
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  12. Charles Blackorby & Craig Brett, 2004. "Production Efficiency and the Direct-Indirect Tax Mix," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 165-180, 02.
  13. Jukka Pirttilä & Matti Tuomala, 2005. "Public Versus Private Production Decisions: Redistribution and the Size of the Public Sector," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 120-, March.
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  15. Rodrik, Dani, 2000. "What Drives Public Employment in Developing Countries?," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 229-43, October.
  16. KaiA. Konrad & SebastianG. Kessing, 2008. "Time Consistency and Bureaucratic Budget Competition," Economic Journal, Royal Economic Society, vol. 118(525), pages 1-15, 01.
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