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What Drives Public Employment in Developing Countries?

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  • Rodrik, Dani

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 against undiversifiable 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. Copyright 2000 by Blackwell Publishing Ltd

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  • Rodrik, Dani, 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:229-43
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    Cited by:

    1. Francois Langot & Shaimaa Yassin, 2016. "Informality, Public Employment and Employment Protection in Developing Countries," IRENE Working Papers 16-09, IRENE Institute of Economic Research.
    2. Arzu Yavuz, 2011. "Productivity and Wage Differentials between Private and Public Sector in the Developing Countries (Gelismekte Olan Ülkelerde Özel ve Kamu Sektöründeki Verimlilik ve Ücret Farklilasmasi)," Working Papers 1103, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    3. 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.
    4. P R Agénor, 2005. "The Analytics of Segmented Labor Markets," Centre for Growth and Business Cycle Research Discussion Paper Series 52, Economics, The Univeristy of Manchester.
    5. Anna Carolina Saba dos Reis & Eduardo Zilberman, 2013. "On the Optimal Size of Public Employment," Textos para discussão 612, Department of Economics PUC-Rio (Brazil).
    6. Gabriela Grotkowska & Leszek Wincenciak & Tomasz Gajderowicz, 2017. "Evolution of the Public-Sector Wage Premium in Poland," Gospodarka Narodowa, Warsaw School of Economics, issue 1, pages 5-31.
    7. Gonzalo Fernández-de-Córdoba & Javier Pérez & José Torres, 2012. "Public and private sector wages interactions in a general equilibrium model," Public Choice, Springer, vol. 150(1), pages 309-326, January.
    8. Vlachos, Jonas, 2005. "Does Labour Market Risk Increase the Size of the Public Sector? Evidence from Swedish Municipalities," CEPR Discussion Papers 5091, C.E.P.R. Discussion Papers.
    9. KaiA. Konrad & SebastianG. Kessing, 2008. "Time Consistency and Bureaucratic Budget Competition," Economic Journal, Royal Economic Society, vol. 118(525), pages 1-15, January.
    10. Jelena Lausev, 2014. "WHAT HAS 20 YEARS OF PUBLIC–PRIVATE PAY GAP LITERATURE TOLD US? EASTERN EUROPEAN TRANSITIONING vs. DEVELOPED ECONOMIES," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 516-550, July.
    11. Sebastian Kessing & Chiara Strozzi, 2012. "The Regional Distribution of Public Employment: Theory and Evidence," Department of Economics 0682, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    12. 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.
    13. Rickard, Stephanie J. & Caraway, Teri L., 2018. "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.
    14. Natalia Danzer, 2013. "Job Satisfaction and Self-Selection into the Public or Private Sector: Evidence from a Natural Experiment," ifo Working Paper Series 169, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    15. Martin Rama, 2002. "Mondialisation, inégalités et politiques de l'emploi," Revue d’économie du développement, De Boeck Université, vol. 10(1), pages 43-83.

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