The effects of public transfers on productivity
This paper attempts to establish empirically the effects of transfers to household on labour productivity growth. In particular, I investigate the effects of health and social security expenditure on the rate of growth of GDP per labour units in 19 sectors and 13 OECD countries in the period 1976-2000. The main result is that transfers such as health expenditure and social security spending have positive and significant effects on labour productivity in the sectors that require low skilled workers, such as manufacturing of non-durable goods, energy supply, construction and services. This research shows that these results could be due to a "risk insuring" mechanism: employees with low wages (on average low skilled and high labour intensive jobs are less paid than high tech ones) find in higher government spending a guarantee of safety and wellbeing, otherwise difficult to achieve with their own resources. Moreover the increased security allows them to divert resources towards higher saving and investment in education. These results are consistent with the assumption that fiscal variables affect growth by means of total factor productivity and robust to the test of a possible spurious correlation between public transfers and growth, due to openness to trade.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://economia.unipr.it/de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- William Easterly & Sergio Rebelo, 1993.
"Fiscal Policy and Economic Growth: An Empirical Investigation,"
NBER Working Papers
4499, National Bureau of Economic Research, Inc.
- Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
- Easterly, William & Rebelo, Sérgio, 1994. "Fiscal Policy and Economic Growth: An Empirical Investigation," CEPR Discussion Papers 885, C.E.P.R. Discussion Papers.
- Erich Weede, 1991. "The impact of state power on economic growth rates in OECD countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 25(4), pages 421-438, November.
- Rocio Ribero, 1999. "Earnings Effects of Household Investment in Health in Colombia," Working Papers 810, Economic Growth Center, Yale University.
- Robert J. Barro, 1989.
"Economic Growth in a Cross Section of Countries,"
NBER Working Papers
3120, National Bureau of Economic Research, Inc.
- Alberto Alesina & Roberto Perotti, 1994.
"The Welfare State and Competitiveness,"
NBER Working Papers
4810, National Bureau of Economic Research, Inc.
- Eric M. Engen & Jonathan Skinner, 1992. "Fiscal Policy and Economic Growth," NBER Working Papers 4223, National Bureau of Economic Research, Inc.
- Devereux, Michael B & Head, Allen C & Lapham, Beverly J, 1996. "Monopolistic Competition, Increasing Returns, and the Effects of Government Spending," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 233-54, May.
- Wildasin, David E, 1995. " Factor Mobility, Risk and Redistribution in the Welfare State," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 527-46, December.
- Fölster, Stefan & Henrekson, Magnus, 2000.
"Growth Effects of Government Expenditure and Taxation in Rich Countries,"
SSE/EFI Working Paper Series in Economics and Finance
391, Stockholm School of Economics.
- Folster, Stefan & Henrekson, Magnus, 2001. "Growth effects of government expenditure and taxation in rich countries," European Economic Review, Elsevier, vol. 45(8), pages 1501-1520, August.
- Fölster, Stefan & Henrekson, Magnus, 1998. "Growth Effects of Government Expenditure and Taxation in Rich Countries," Working Paper Series 503, Research Institute of Industrial Economics, revised 20 Jun 2000.
- A. B. Atkinson, 1999. "The Economic Consequences of Rolling Back the Welfare State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011719, June.
- Rodrik, Dani, 1996.
"Why do More Open Economies Have Bigger Governments?,"
CEPR Discussion Papers
1388, C.E.P.R. Discussion Papers.
- Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
- Dani Rodrik, 1996. "Why Do More Open Economies Have Bigger Governments?," NBER Working Papers 5537, National Bureau of Economic Research, Inc.
- Xavier Sala-i-Martin, 1992. "Transfers," NBER Working Papers 4186, National Bureau of Economic Research, Inc.
- Fölster, Stefan & Henrekson, Magnus, 1997.
"Growth and the Public Sector: A Critique of the Critics,"
Working Paper Series
492, Research Institute of Industrial Economics, revised 10 Jun 1998.
- Folster, Stefan & Henrekson, Magnus, 1999. "Growth and the public sector: a critique of the critics," European Journal of Political Economy, Elsevier, vol. 15(2), pages 337-358, June.
- Asea, Patrick & Mendoza, Enrique G & Milesi-Ferretti, Gian Maria, 1996.
"On the Ineffectiveness of Tax Policy in Altering Long- Run Growth: Harberger's Superneutrality Conjecture,"
CEPR Discussion Papers
1378, C.E.P.R. Discussion Papers.
- Mendoza, Enrique G. & Milesi-Ferretti, Gian Maria & Asea, Patrick, 1997. "On the ineffectiveness of tax policy in altering long-run growth: Harberger's superneutrality conjecture," Journal of Public Economics, Elsevier, vol. 66(1), pages 99-126, October.
- Hassan Molana & Catia Montagna, 2002. "Cumulative Causation, Capital Mobility and the Welfare State," Dundee Discussion Papers in Economics 128, Economic Studies, University of Dundee.
- Kneller, Richard & Bleaney, Michael F. & Gemmell, Norman, 1999. "Fiscal policy and growth: evidence from OECD countries," Journal of Public Economics, Elsevier, vol. 74(2), pages 171-190, November.
- Hansson, Par & Henrekson, Magnus, 1994. " A New Framework for Testing the Effect of Government Spending on Growth and Productivity," Public Choice, Springer, vol. 81(3-4), pages 381-401, December.
When requesting a correction, please mention this item's handle: RePEc:par:dipeco:2005-ep01. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Andrea Lasagni)
If references are entirely missing, you can add them using this form.