The Regional Distribution of Public Employment: Theory and Evidence

Sebastian Kessing and Chiara Strozzi ()

No 6449, IZA Discussion Papers from Institute of Labor Economics (IZA)

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-efficiency 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 find evidence that public employment is systematically higher in low productivity regions. The latter effect is stronger in countries with higher levels of regional inequality.

Keywords: public employment; redistribution; regional inequality; European regions (search for similar items in EconPapers)
JEL-codes: H11 J45 R12 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2012-03
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - revised and updated version published in: Regional Studies, 2017, 51 (7), 1100-1114

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Related works:
Journal Article: The regional distribution of public employment: theory and evidence (2017)
Working Paper: The Regional Distribution of Public Employment:Theory and Evidence (2016)
Working Paper: The Regional Distribution of Public Employment: Theory and Evidence (2012)
Working Paper: The Regional Distribution of Public Employment: Theory and Evidence (2012)
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