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Lewis Through A Looking Glass: Public Sector Employment, Rent-Seeking And Economic Growth

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  • KNIGHT, J.B.
  • SABOT, R.H.

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.
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Suggested Citation

  • Knight, J.B. & Sabot, R.H., 1988. "Lewis Through A Looking Glass: Public Sector Employment, Rent-Seeking And Economic Growth," Center for Development Economics 108, Department of Economics, Williams College.
    • Handle: RePEc:wil:wilcde:108
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    References listed on IDEAS

    as
    1. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June.
    2. Robert Bacon & Walter Eltis, 1978. "Britain’s Economic Problem: Too Few Producers," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-15863-8, October.
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    6. Mellor, John W & Johnston, Bruce F, 1984. "The World Food Equation: Interrelations among Development, Employment, and Food Consumption," Journal of Economic Literature, American Economic Association, vol. 22(2), pages 531-574, June.
    7. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    8. Mr. Alan A. Tait & Mr. Peter S. Heller, 1983. "Government Employment and Pay: Some International Comparisons," IMF Occasional Papers 1983/007, International Monetary Fund.
    9. Anand, Sudhir & Joshi, Vijay, 1979. "Domestic Distortions, Income Distribution and the Theory of Optimum Subsidy," Economic Journal, Royal Economic Society, vol. 89(354), pages 336-352, June.
    10. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
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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, April.
    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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