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The size and performance of public sector activities in Europe

Author

Listed:
  • Heinz Handler

    (Austrian Institute of Economic Research)

  • Bertrand Koebel

    (University of Strasbourg)

  • Philipp Reiss

    (University of Madgeburg)

  • Margit Schratzenstaller

    (Austrian Institute of Economic Research)

Abstract

The obvious difference in the economic performance of countries has led to the question why some countries are so much wealthier than others, and whether the size, the structure, and the organisation of the public sector contribute to cross-country income and growth gaps. Public sector activities may have an effect on overall productivity and growth either directly by the level and changes of productivity within the public sector, or indirectly by triggering off productivity changes in private production. This paper is concerned with the former aspect. It provides an overview of the size and the structure of the public sector in Europe and compares it with the US and Japan. This is related to the more recent empirical literature on public sector performance. After reviewing some of the measurement issues related to public services, the evidence on the size of government and its performance is analysed. The results on industrial countries are not fully conclusive, but seem to attribute more efficiency to smaller rather than to larger governments. Public sector reforms to consolidate the size of government are therefore likely to enhance the sector's own productivity and thereby positively contribute to overall economic performance.

Suggested Citation

  • Heinz Handler & Bertrand Koebel & Philipp Reiss & Margit Schratzenstaller, 2005. "The size and performance of public sector activities in Europe," Public Economics 0507011, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwppe:0507011
    Note: Type of Document - pdf; pages: 28
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    References listed on IDEAS

    as
    1. Heinz Handler & Andreas Knabe & Bertrand Koebel & Margit Schratzenstaller & Sven Wehke, 2005. "The Impact of Public Budgets on Overall Productivity Growth," WIFO Working Papers 255, WIFO.
    2. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    3. Tito Boeri & Axel Börsch-Supan & Guido Tabellini, 2001. "Would you like to shrink the welfare state? A survey of European citizens," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 7-50, April.
    4. António Afonso & Miguel St. Aubyn, 2004. "Non-parametric Approaches to Education and Health Expenditure Efficiency in OECD Countries," Working Papers Department of Economics 2004/01, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    5. António Afonso & Ludger Schuknecht & Vito Tanzi, 2005. "Public sector efficiency: An international comparison," Public Choice, Springer, vol. 123(3), pages 321-347, June.
    6. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
    7. Olivier Blanchard, 2004. "The Economic Future of Europe," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 3-26, Fall.
    8. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association;National Tax Journal, vol. 46(2), pages 237-243, June.
    9. Isabelle Joumard & Per Mathis Kongsrud & Young-Sook Nam & Robert Price, 2004. "Enhancing the Effectiveness of Public Spending: Experience in OECD Countries," OECD Economics Department Working Papers 380, OECD Publishing.
    10. Oates, Wallace E., 1993. "Fiscal Decentralization and Economic Development," National Tax Journal, National Tax Association, vol. 46(2), pages 237-43, June.
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    Citations

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    Cited by:

    1. Faridah Djellal & Faïz Gallouj, 2013. "The productivity Challenge in Services: Measurement and Strategic Perspectives," Post-Print halshs-01133198, HAL.
    2. Heinz Handler & Andreas Knabe & Bertrand Koebel & Margit Schratzenstaller & Sven Wehke, 2005. "The Impact of Public Budgets on Overall Productivity Growth," WIFO Working Papers 255, WIFO.
    3. Matt Andrews, 2008. "The Good Governance Agenda: Beyond Indicators without Theory," Oxford Development Studies, Taylor & Francis Journals, vol. 36(4), pages 379-407.
    4. Seri, Paolo & Zanfei, Antonello, 2013. "The co-evolution of ICT, skills and organization in public administrations: Evidence from new European country-level data," Structural Change and Economic Dynamics, Elsevier, vol. 27(C), pages 160-176.
    5. Faridah Djellal & Faïz Gallouj, 2011. "Beyond Productivity Measurement and Strategies: Performance Evaluation and Strategies in Services," Post-Print halshs-01113986, HAL.
    6. Steven Van de Walle, 2009. "International Comparisons of Public Sector Performance," Public Management Review, Taylor & Francis Journals, vol. 11(1), pages 39-56, January.
    7. Ad van Riet & Moreno Roma, 2006. "Competition, productivity and prices in the euro area services sector," Occasional Paper Series 44, European Central Bank.
    8. Faridah Djellal & Faïz Gallouj, 2007. "Les services publics à l'épreuve de la productivité et la productivité à l'épreuve des services publics," Revue d'économie industrielle, De Boeck Université, vol. 0(3), pages 2-2.
    9. Sotiris Theodoropoulos, 2012. "Seeking a sustainable size and structure for the Greek public sector’s activities according to the fiscal pact for Euro," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 62(3-4), pages 75-92, July - De.
    10. repec:wfo:wstudy:27446 is not listed on IDEAS

    More about this item

    Keywords

    public sector size; performance of public sector;

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H - Public Economics

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