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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

    ()

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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Web page: http://www.dep.unimore.it/
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Keywords: Public employment; redistribution; regional inequality; European regions;

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  1. Alberto Alesina & Stephan Danninger & Massimo Rostagno, 1999. "Redistribution Through Public Employment: The Case of Italy," NBER Working Papers 7387, National Bureau of Economic Research, Inc.
  2. Alberto Alesina & Reza Baqir & William Easterly, 1998. "Redistributive Public Employment," NBER Working Papers 6746, National Bureau of Economic Research, Inc.
  3. 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.
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  5. Boadway, Robin & Keen, Michael, 1993. "Public Goods, Self-Selection and Optimal Income Taxation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 463-78, August.
  6. S�ren Blomquist & Vidar Christiansen & Luca Micheletto, 2010. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 1-27, May.
  7. Naito, Hisahiro, 1999. "Re-examination of uniform commodity taxes under a non-linear income tax system and its implication for production efficiency," Journal of Public Economics, Elsevier, vol. 71(2), pages 165-188, February.
  8. Jorge Martinez-Vazquez & Ming-Hung Yao, 2009. "Fiscal Decentralization and Public Sector Employment: A Cross-Country Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  9. Esteban Jaimovich & Juan Pablo Rud, 2009. "Excessive Public Employment and Rent-Seeking Traps," Carlo Alberto Notebooks 118, Collegio Carlo Alberto.
  10. Marina Murat & Barbara Pistoresi, 2006. "Emigrants and immigrants networks in FDI," Department of Economics 0546, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
  11. Enlinson Mattos & Vitor França, 2011. "Public employment and income redistribution: causal evidence for Brazilian municipalities," Public Choice, Springer, vol. 146(1), pages 43-73, January.
  12. Michael Lundholm & Hans Wijkander, 2008. "Why Do Scandinavian Governments Employ So Many and the United States Government So Few?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(3), pages 364-379, September.
  13. Lars-Erik Borge & Egil Matsen, 2004. "Public Employment and Regional Risk Sharing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 215-230, 06.
  14. Giuseppe Marotta, 1997. "Does trade credit redistribution thwart monetary policy? Evidence from Italy," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1619-1629.
  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. Wilson, John D., 1982. "The optimal public employment policy," Journal of Public Economics, Elsevier, vol. 17(2), pages 241-258, March.
  17. 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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