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Lewis through a looking glass : public sector employment, rent-seeking, and economic growth

Author

Listed:
  • Gelb, Alan
  • Sabot, Richard H.
  • Knight, John B.

Abstract

This paper argues that the labor transfer process outlined by the Lewis model (1954) can give rise to surplus labour - in the sense than the marginal product of labour is less that the wage - in the public part of the modern sector and that this may deprive the modern sector of its dynamism. Moreover, creating sheltered employment tends to be self-perpetuating. It creates and consolidates vested interests that seek to perpetuate the protected jobs. In the inverse of the Lewis model, the extent of surplus labour increases, rather than diminishes, over time.

Suggested Citation

  • Gelb, Alan & Sabot, Richard H. & Knight, John B., 1988. "Lewis through a looking glass : public sector employment, rent-seeking, and economic growth," Policy Research Working Paper Series 133, The World Bank.
    • Handle: RePEc:wbk:wbrwps:133
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    References listed on IDEAS

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    Cited by:

    1. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
    2. Sven Wunder, 1992. "La enfermedad holandesa y el caso colombiano," Coyuntura Económica, Fedesarrollo, vol. 22(1), pages 167-190.
    3. Caselli, Francesco, 2005. "Accounting for cross-country income differences," LSE Research Online Documents on Economics 3567, London School of Economics and Political Science, LSE Library.

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