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The size and performance of public sector activities in Europe

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Author Info

  • Heinz Handler

    (Austrian Institute of Economic Research)

  • Bertrand Koebel

    (University of Strasbourg)

  • Philipp Reiss

    (University of Madgeburg)

  • Margit Schratzenstaller

    (Austrian Institute of Economic Research)

Abstract

The obvious difference in the economic performance of countries has led to the question why some countries are so much wealthier than others, and whether the size, the structure, and the organisation of the public sector contribute to cross-country income and growth gaps. Public sector activities may have an effect on overall productivity and growth either directly by the level and changes of productivity within the public sector, or indirectly by triggering off productivity changes in private production. This paper is concerned with the former aspect. It provides an overview of the size and the structure of the public sector in Europe and compares it with the US and Japan. This is related to the more recent empirical literature on public sector performance. After reviewing some of the measurement issues related to public services, the evidence on the size of government and its performance is analysed. The results on industrial countries are not fully conclusive, but seem to attribute more efficiency to smaller rather than to larger governments. Public sector reforms to consolidate the size of government are therefore likely to enhance the sector's own productivity and thereby positively contribute to overall economic performance.

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File URL: http://128.118.178.162/eps/pe/papers/0507/0507011.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Public Economics with number 0507011.

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Length: 28 pages
Date of creation: 19 Jul 2005
Date of revision:
Handle: RePEc:wpa:wuwppe:0507011

Note: Type of Document - pdf; pages: 28
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Web page: http://128.118.178.162

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Keywords: public sector size; performance of public sector;

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References

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  1. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  2. António Afonso & Miguel St. Aubyn, 2004. "Non-parametric Approaches to Education and Health Expenditure Efficiency in OECD Countries," Working Papers 2004/01, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon..
  3. Ludger Schuknecht & Antonio Afonso & Vito Tanzi, 2003. "Public sector efficiency: an international comparison," Working Paper Series 242, European Central Bank.
  4. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
  5. Heinz Handler & Andreas Knabe & Bertrand Koebel & Margit Schratzenstaller & Sven Wehke, 2005. "The Impact of Public Budgets on Overall Productivity Growth," WIFO Working Papers 255, WIFO.
  6. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 3-26, Fall.
  7. Tito Boeri & Axel Börsch-Supan & Guido Tabellini, 2001. "Would you like to shrink the welfare state? A survey of European citizens," Economic Policy, CEPR & CES & MSH, vol. 16(32), pages 7-50, 04.
  8. Isabelle Joumard & Per Mathis Kongsrud & Young-Sook Nam & Robert Price, 2004. "Enhancing the Effectiveness of Public Spending: Experience in OECD Countries," OECD Economics Department Working Papers 380, OECD Publishing.
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Citations

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Cited by:
  1. Ad van Riet & Moreno Roma, 2006. "Competition, productivity and prices in the euro area services sector," Occasional Paper Series 44, European Central Bank.
  2. Heinz Handler & Andreas Knabe & Bertrand Koebel & Margit Schratzenstaller & Sven Wehke, 2005. "The Impact of Public Budgets on Overall Productivity Growth," WIFO Working Papers 255, WIFO.
  3. Paolo Seri & Antonello Zanfei, 2012. "The Co-evolution of ICT, Skills and Organization in Public Administrations: Evidence from new European country-level data," Working Papers 1217, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2012.

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