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What Drives Public Employment in Developing Countries?

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  • Dani Rodrik

Abstract

An excessive level of employment is a frequent complaint made about public‐sector governance in developing economies. The explanation typically offered is that governments use public‐sector employment as a tool for generating and redistributing rents. This article suggests an alternative hypothesis: relatively safe government jobs represent partial insurance againstundiversifiable external risk faced by the domestic economy. I show that countries that are greatly exposed to external risk have higher levels of government employment and have experienced faster rates of growth of government consumption. The basic finding on this (partial) correlation is robust against the hypotheses typically offered.

Suggested Citation

  • Dani Rodrik, 2000. "What Drives Public Employment in Developing Countries?," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 229-243, October.
  • Handle: RePEc:bla:rdevec:v:4:y:2000:i:3:p:229-243
    DOI: 10.1111/1467-9361.00091
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    Cited by:

    1. Mostafa Shahen & Koji Kotani & Makoto Kakinaka, 2019. "Wage and labor mobility between public, formal private and informal private sectors in Egypt," Working Papers SDES-2019-4, Kochi University of Technology, School of Economics and Management, revised May 2019.
    2. Caleb Stroup & Ben Zissimos, 2017. "Pampered Bureaucracy, Political Stability and Trade Integration," Review of Development Economics, Wiley Blackwell, vol. 21(3), pages 425-450, August.
    3. Shahen, Mostafa E. & Kotani, Koji & Kakinaka, Makoto & Managi, Shunsuke, 2020. "Wage and labor mobility between public, formal private and informal private sectors in a developing country," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 101-113.
    4. Yassin, Shaimaa & Langot, François, 2018. "Informality, public employment and employment protection in developing countries," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 326-348.
    5. Stephanie J. Rickard & Teri L. Caraway, 2019. "International demands for austerity: Examining the impact of the IMF on the public sector," The Review of International Organizations, Springer, vol. 14(1), pages 35-57, March.
    6. Gözgör, Giray & Bilgin, Mehmet Huseyin & Zimmermann, Klaus F., 2019. "Public employment decline in developing countries in the 21st century: The role of globalization," Economics Letters, Elsevier, vol. 184(C).
    7. Danzer, Natalia, 2019. "Job satisfaction and self-selection into the public or private sector: Evidence from a natural experiment," Labour Economics, Elsevier, vol. 57(C), pages 46-62.
    8. Kai A. Konrad & Sebastian G. Kessing, 2008. "Time Consistency and Bureaucratic Budget Competition," Economic Journal, Royal Economic Society, vol. 118(525), pages 1-15, January.
    9. Rickard, Stephanie J. & Caraway, Teri L., 2019. "International demands for austerity: examining the impact of the IMF on the public sector," LSE Research Online Documents on Economics 86636, London School of Economics and Political Science, LSE Library.
    10. Gabriela Grotkowska & Leszek Wincenciak & Tomasz Gajderowicz, 2017. "Evolution of the Public-Sector Wage Premium in Poland," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 5-31.
    11. Lasse Aaskoven, 2016. "Fiscal Transparency, Elections and Public Employment: Evidence from the OECD," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 317-341, November.
    12. Rebecca Simson, 2020. "The Rise and Fall of the Bureaucratic Bourgeoisie: Public Sector Employees and Economic Privilege in Postcolonial Kenya and Tanzania," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(5), pages 607-635, July.

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