Redistribution Through Public Employment: The Case of Italy

Stephan Danninger, Alberto Alesina and Massimo Rostagno

No 1999/177, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the regional distribution of public employment in Italy and documents two sets of facts. The first is the use of public employment as a subsidy from the North to the less wealthy South. We calculate that about half of the wage bill in the South of Italy can be identified as a subsidy, with both the size of public employment and wage levels used as a redistributive device. The second set of facts concerns the negative effects of subsidized public employment on individuals’ attitudes toward job search, education, and “risk-taking” activities. We conclude that heavy reliance on public employment distorts incentives and discourages the development of market activities in the South.

Keywords: WP; private sector; dependent variable; wage premium; cost of living; Public Employment; Redistribution of Income; Public Policy and Economic Behavior of Agents; wage regression; work experience; wage bill; wage comparison; wage rate; entrepreneurial activity; public sector wage policy; bill of the South; benchmark wage; wage variation; price level; Public sector; Wages; Employment (search for similar items in EconPapers)
Pages: 44
Date: 1999-12-01
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Citations: View citations in EconPapers (35)

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Related works:
Journal Article: Redistribution Through Public Employment: The Case of Italy (2001)
Working Paper: Redistribution Through Public Employment: The Case of Italy (1999)
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