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Lewis through a looking glass : public sector employment, rent-seeking, and economic growth

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  • Gelb, Alan
  • Sabot, Richard H.
  • Knight, John B.

Abstract

This paper argues that the labor transfer process outlined by the Lewis model (1954) can give rise to surplus labour - in the sense than the marginal product of labour is less that the wage - in the public part of the modern sector and that this may deprive the modern sector of its dynamism. Moreover, creating sheltered employment tends to be self-perpetuating. It creates and consolidates vested interests that seek to perpetuate the protected jobs. In the inverse of the Lewis model, the extent of surplus labour increases, rather than diminishes, over time.

Suggested Citation

  • Gelb, Alan & Sabot, Richard H. & Knight, John B., 1988. "Lewis through a looking glass : public sector employment, rent-seeking, and economic growth," Policy Research Working Paper Series 133, The World Bank.
    • Handle: RePEc:wbk:wbrwps:133
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    References listed on IDEAS

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    1. Robert Bacon & Walter Eltis, 1978. "Britain’s Economic Problem: Too Few Producers," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-15863-8.
    2. Krueger, Anne O. & Tuncer, Baran, 1982. "Growth of factor productivity in Turkish manufacturing industries," Journal of Development Economics, Elsevier, vol. 11(3), pages 307-325, December.
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    5. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    6. Mr. Alan A. Tait & Mr. Peter S. Heller, 1983. "Government Employment and Pay: Some International Comparisons," IMF Occasional Papers 1983/007, International Monetary Fund.
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    8. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    9. Auty, Richard & Gelb, Alan, 1986. "Oil windfalls in a small parliamentary democracy: Their impact on Trinidad and Tobago," World Development, Elsevier, vol. 14(9), pages 1161-1175, September.
    10. Mellor, John W & Johnston, Bruce F, 1984. "The World Food Equation: Interrelations among Development, Employment, and Food Consumption," Journal of Economic Literature, American Economic Association, vol. 22(2), pages 531-574, June.
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    Cited by:

    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    2. Sven Wunder, 1992. "La enfermedad holandesa y el caso colombiano," Coyuntura Económica, Fedesarrollo, vol. 22(1), pages 167-190, April.
    3. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.

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