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Redistribution Through Public Employment: The Case of Italy

Author

Listed:
  • Mr. Alberto Alesina
  • Mr. Massimo V. Rostagno
  • Mr. Stephan Danninger

Abstract

This paper examines the regional distribution of public employment in Italy and documents two sets of facts. The first is the use of public employment as a subsidy from the North to the less wealthy South. We calculate that about half of the wage bill in the South of Italy can be identified as a subsidy, with both the size of public employment and wage levels used as a redistributive device. The second set of facts concerns the negative effects of subsidized public employment on individuals’ attitudes toward job search, education, and “risk-taking” activities. We conclude that heavy reliance on public employment distorts incentives and discourages the development of market activities in the South.

Suggested Citation

  • Mr. Alberto Alesina & Mr. Massimo V. Rostagno & Mr. Stephan Danninger, 1999. "Redistribution Through Public Employment: The Case of Italy," IMF Working Papers 1999/177, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:1999/177
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    References listed on IDEAS

    as
    1. Alesina, Alberto & Baqir, Reza & Easterly, William, 2000. "Redistributive Public Employment," Journal of Urban Economics, Elsevier, vol. 48(2), pages 219-241, September.
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    6. Erzo Luttmer, "undated". "Network Effects and Welfare Cultures," University of Chicago - Population Research Center 98-13, Chicago - Population Research Center.
    7. Ehrenberg, Ronald G. & Schwarz, Joshua L., 1987. "Public-sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 2, chapter 22, pages 1219-1260, Elsevier.
    8. Richard B. Freeman & Casey Ichniowski, 1988. "When Public Sector Workers Unionize," NBER Books, National Bureau of Economic Research, Inc, number free88-1, January.
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    More about this item

    Keywords

    WP; private sector; dependent variable; wage premium; cost of living; Public Employment; Redistribution of Income; Public Policy and Economic Behavior of Agents; wage regression; work experience; wage bill; wage comparison; wage rate; entrepreneurial activity; public sector wage policy; bill of the South; benchmark wage; wage variation; price level; Public sector; Wages; Employment;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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