IDEAS home Printed from https://ideas.repec.org/p/mod/recent/079.html
   My bibliography  Save this paper

The Regional Distribution of Public Employment: Theory and Evidence

Author

Listed:
  • Sebastian G. Kessing
  • Chiara Strozzi

Abstract

We analyze the optimal regional pattern of public employment in an information constrained second-best redistribution policy showing that regionally differentiated public employment can serve as an expenditure side tagging device, bypassing or relaxing the equity-effciency trade-off. The optimal pattern exhibits higher levels of public employment in low productivity regions and is more pronounced the higher is the degree of regional inequality within the country. Empirically, using a panel of European regions from 1995-2007, we found evidence that public employment is systematically higher in low productivity regions. The latter effect is stronger in countries with higher levels of regional inequality.

Suggested Citation

  • Sebastian G. Kessing & Chiara Strozzi, 2012. "The Regional Distribution of Public Employment: Theory and Evidence," Center for Economic Research (RECent) 079, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    • Handle: RePEc:mod:recent:079
    as

    Download full text from publisher

    File URL: http://155.185.68.2/Recentpaper/recent-wp79.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Lundholm & Hans Wijkander, 2008. "Why Do Scandinavian Governments Employ So Many and the United States Government So Few?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 64(3), pages 364-379, September.
    2. Alesina, Alberto & Baqir, Reza & Easterly, William, 2000. "Redistributive Public Employment," Journal of Urban Economics, Elsevier, vol. 48(2), pages 219-241, September.
    3. Boadway, Robin & Keen, Michael, 1993. "Public Goods, Self-Selection and Optimal Income Taxation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 463-478, August.
    4. Dani Rodrik, 2000. "What Drives Public Employment in Developing Countries?," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 229-243, October.
    5. Naito, Hisahiro, 1999. "Re-examination of uniform commodity taxes under a non-linear income tax system and its implication for production efficiency," Journal of Public Economics, Elsevier, vol. 71(2), pages 165-188, February.
    6. Sebastian G. Kessing & Chiara Strozzi, 2017. "The regional distribution of public employment: theory and evidence," Regional Studies, Taylor & Francis Journals, vol. 51(7), pages 1100-1114, July.
    7. Enlinson Mattos & Vitor França, 2011. "Public employment and income redistribution: causal evidence for Brazilian municipalities," Public Choice, Springer, vol. 146(1), pages 43-73, January.
    8. Jorge Martinez-Vazquez & Ming-Hung Yao, 2009. "Fiscal Decentralization and Public Sector Employment: A Cross-Country Analysis," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0903, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. Jukka Pirttilä & Matti Tuomala, 2005. "Public Versus Private Production Decisions: Redistribution and the Size of the Public Sector," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 120-137, March.
    10. 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.
    11. Sören Blomquist & Vidar Christiansen & Luca Micheletto, 2010. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 1-27, May.
    12. Albert Alesina & Stephan Danninger & Massimo Rostagno, 2001. "Redistribution Through Public Employment: The Case of Italy," IMF Staff Papers, Palgrave Macmillan, vol. 48(3), pages 1-2.
    13. Wilson, John D., 1982. "The optimal public employment policy," Journal of Public Economics, Elsevier, vol. 17(2), pages 241-258, March.
    14. Marina Murat & Barbara Pistoresi, 2009. "Emigrant and immigrant networks in FDI," Applied Economics Letters, Taylor & Francis Journals, vol. 16(12), pages 1261-1264.
    15. Thomas Gaube, 2005. "Income Taxation, Endogenous Factor Prices and Production Efficiency," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(2), pages 335-352, June.
    16. Jaimovich, Esteban & Rud, Juan Pablo, 2014. "Excessive public employment and rent-seeking traps," Journal of Development Economics, Elsevier, vol. 106(C), pages 144-155.
    17. Paolo Pinotti, 2015. "The Economic Costs of Organised Crime: Evidence from Southern Italy," Economic Journal, Royal Economic Society, vol. 125(586), pages 203-232, August.
    18. Charles Blackorby & Craig Brett, 2004. "Production Efficiency and the Direct‐Indirect Tax Mix," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(1), pages 165-180, February.
    19. Giuseppe Marotta, 1997. "Does trade credit redistribution thwart monetary policy? Evidence from Italy," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1619-1629.
    20. de la Fuente, Angel, 2004. "Second-best redistribution through public investment: a characterization, an empirical test and an application to the case of Spain," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 489-503, September.
    21. Lars‐Erik Borge & Egil Matsen, 2004. "Public Employment and Regional Risk Sharing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 215-230, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastian G. Kessing & Chiara Strozzi, 2017. "The regional distribution of public employment: theory and evidence," Regional Studies, Taylor & Francis Journals, vol. 51(7), pages 1100-1114, July.
    2. OBARA, Takuya, 2016. "Differential Income Taxation and Tiebout Sorting," CCES Discussion Paper Series 64_v2, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    3. Syamsir Syamsir, 2015. "Public Service Motivation among Indonesian Employees: a Critical Review Toward the Psm Theory," European Journal of Social Sciences Education and Research Articles, Revistia Research and Publishing, vol. 2, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shigeo Morita & Takuya Obara, 2021. "Public investment criteria under optimal nonlinear income taxation without commitment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(4), pages 732-745, August.
    2. Stéphane Gauthier & Guy Laroque, 2019. "Production efficiency and profit taxation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 52(2), pages 215-223, February.
    3. Craig Brett & John A. Weymark, 2009. "Comparative Statics of Optimal Nonlinear Income Taxation in the Presence of a Publicly Provided Input," Vanderbilt University Department of Economics Working Papers 0910, Vanderbilt University Department of Economics.
    4. Jukka Pirttilä & Håkan Selin, 2011. "Tax Policy and Employment: How Does the Swedish System Fare," Working Papers 267, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    5. Firouz Gahvari, 2014. "Second-Best Taxation of Incomes and Non-Labor Inputs in a Model with Endogenous Wages," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(6), pages 917-935, December.
    6. Firouz Gahvari & Luca Micheletto, 2020. "Wage endogeneity, tax evasion, and optimal nonlinear income taxation," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 501-531, June.
    7. Thomas Gaube, 2005. "Income Taxation, Endogenous Factor Prices and Production Efficiency," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(2), pages 335-352, June.
    8. 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.
    9. Fontaine, Idriss & Gálvez-Iniesta, Ismael & Gomes, Pedro & Vila-Martin, Diego, 2020. "Labour market flows: Accounting for the public sector," Labour Economics, Elsevier, vol. 62(C).
    10. Drenik, Andres & Perez-Truglia, Ricardo, 2018. "Sympathy for the diligent and the demand for workfare," Journal of Economic Behavior & Organization, Elsevier, vol. 153(C), pages 77-102.
    11. Marta Curto-Grau, 2017. "Voters’ responsiveness to public employment policies," Public Choice, Springer, vol. 170(1), pages 143-169, January.
    12. Thomas Gaube, 2005. "Public Investment and Income Taxation: Redistribution vs. Productive Performance," Journal of Economics, Springer, vol. 86(1), pages 1-18, October.
    13. Spencer Bastani & Firouz Gahvari & Luca Micheletto, 2022. "Nonlinear Taxation of Income and Education in the Presence of Income-Misreporting," CESifo Working Paper Series 9987, CESifo.
    14. Hisahiro Naito, 2016. "Optimal Shadow Prices for the Public Sector in the Presence of a Non-linear Income Tax System in an Open Economy," Tsukuba Economics Working Papers 2016-003, Faculty of Humanities and Social Sciences, University of Tsukuba.
    15. Tindara Addabbo & Anna Maccagnan & Carmen Llorca-Rodríguez & Rosa García-Fernández, 2010. "Income distribution and the effect of the financial crisis on the Italian and Spanish labour markets," Department of Economics 0639, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
    16. Hanming Fang & Peter Norman, 2014. "Toward an efficiency rationale for the public provision of private goods," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(2), pages 375-408, June.
    17. Adrian Nicholas Gachet, 2022. "Help Me Help You? Populism and Distributive Politics in Ecuador," Economics Discussion Paper Series 2205, Economics, The University of Manchester.
    18. Clark, Andrew E. & Milcent, Carine, 2011. "Public employment and political pressure: The case of French hospitals," Journal of Health Economics, Elsevier, vol. 30(5), pages 1103-1112.
    19. Barigozzi, Francesca & Cremer, Helmuth & Roeder, Kerstin, 2020. "Having it all, for all: Child-care subsidies and income distribution reconciled," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 188-211.
    20. Emanuele Ciani & Donatella Fresu, 2011. "From SHIW to IT-SILC: construction and representativeness of the new CAPP_DYN first-year population," Center for the Analysis of Public Policies (CAPP) 0092, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".

    More about this item

    Keywords

    Public employment; redistribution; regional inequality; European regions;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mod:recent:079. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/demodit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.