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Redistribution Through Public Employment; The Case of Italy

  • Stephan Danninger
  • Alberto Alesina
  • Massimo V. Rostagno

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.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 99/177.

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Length: 44
Date of creation: 01 Dec 1999
Date of revision:
Handle: RePEc:imf:imfwpa:99/177
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  1. Borjas, George J., 1986. "The earnings of state government employees in the United States," Journal of Urban Economics, Elsevier, vol. 19(2), pages 156-173, March.
  2. 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.
  3. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
  4. Sendhil Mullainathan & Marianne Bertrand & Erzo F.P. Luttmer, 1998. "Network Effects and Welfare Cultures," Working papers 98-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Erich Gundlach & Ludger Wößmann & Jens Gmelin, 1999. "The Decline of Schooling Productivity in OECD Countries," Kiel Working Papers 926, Kiel Institute for the World Economy.
  6. Coate, Stephen & Morris, Stephen, 1995. "On the Form of Transfers in Special Interests," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1210-35, December.
  7. Easterly, William & Baqir, Reza & Alesina, Alberto, 2000. "Redistributive Public Employment," Scholarly Articles 4553013, Harvard University Department of Economics.
  8. Erzo Luttmer, . "Network Effects and Welfare Cultures," University of Chicago - Population Research Center 98-13, Chicago - Population Research Center.
  9. Richard B. Freeman & Casey Ichniowski, 1988. "When Public Sector Workers Unionize," NBER Books, National Bureau of Economic Research, Inc, number free88-1, October.
  10. Randall W. Eberts & Timothy J. Gronberg, 1992. "Wagner's hypothesis: a local perspective," Working Paper 9202, Federal Reserve Bank of Cleveland.
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