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

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Author Info

  • 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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 133.

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Date of creation: 30 Nov 1988
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Handle: RePEc:wbk:wbrwps:133

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Related research

Keywords: Environmental Economics&Policies; Banks&Banking Reform; Economic Theory&Research; Public Sector Economics&Finance; Health Monitoring&Evaluation;

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  1. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
  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.
  3. Anand, Sudhir & Joshi, Vijay, 1979. "Domestic Distortions, Income Distribution and the Theory of Optimum Subsidy," Economic Journal, Royal Economic Society, vol. 89(354), pages 336-52, June.
  4. Hill, Hal, 1982. "State enterprises in a competitive industry: An Indonesian case study," World Development, Elsevier, vol. 10(11), pages 1015-1023, November.
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Cited by:
  1. Francesco Caselli, 2004. "Accounting for Cross-Country Income Differences," NBER Working Papers 10828, National Bureau of Economic Research, Inc.
  2. Francesco Caselli, 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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