The Regional Distribution of Public Employment: Theory and Evidence
AbstractWe 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-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 found 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 InfoPaper provided by University of Modena and Reggio E., Dept. of Economics in its series Center for Economic Research (RECent) with number 079.
Length: pages 25
Date of creation: Mar 2012
Date of revision:
Public employment; redistribution; regional inequality; European regions;
Other versions of this item:
- Kessing, Sebastian G. & Strozzi, Chiara, 2012. "The Regional Distribution of Public Employment: Theory and Evidence," IZA Discussion Papers 6449, Institute for the Study of Labor (IZA).
- Sebastian Kessing & Chiara Strozzi, 2012. "The Regional Distribution of Public Employment: Theory and Evidence," Department of Economics 0682, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-28 (All new papers)
- NEP-EUR-2012-03-28 (Microeconomic European Issues)
- NEP-GEO-2012-03-28 (Economic Geography)
- NEP-URE-2012-03-28 (Urban & Real Estate Economics)
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