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Redistribution Through Public Employment: The Case of Italy

Author

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

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. Stephan Danninger & Mr. Alberto Alesina & Mr. Massimo V. Rostagno, 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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    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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