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

Alan Gelb, Richard H. Sabot and John Knight

No 133, Policy Research Working Paper Series from The World Bank

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.

Keywords: Environmental Economics&Policies; Banks&Banking Reform; Economic Theory&Research; Public Sector Economics&Finance; Health Monitoring&Evaluation (search for similar items in EconPapers)
Date: 1988-11-30
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Citations: View citations in EconPapers (4)

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Working Paper: LEWIS THROUGH A LOOKING GLASS: PUBLIC SECTOR EMPLOYMENT, RENT-SEEKING AND ECONOMIC GROWTH (1988)
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Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:133

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