Lewis through a looking glass : public sector employment, rent-seeking, and economic growth
AbstractThis 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 InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 133.
Date of creation: 30 Nov 1988
Date of revision:
Environmental Economics&Policies; Banks&Banking Reform; Economic Theory&Research; Public Sector Economics&Finance; Health Monitoring&Evaluation;
Other versions of this item:
- Knight, J.B. & Sabot, R.H., 1988. "Lewis Through A Looking Glass: Public Sector Employment, Rent-Seeking And Economic Growth," Center for Development Economics 108, Department of Economics, Williams College.
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- 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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