Redistribution Through Public Employment: The Case of Italy

44 Pages Posted: 14 Feb 2006

See all articles by Alberto F. Alesina

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Stephan Danninger

International Monetary Fund (Research Department)

Massimo Rostagno

European Central Bank (ECB)

Multiple version iconThere are 2 versions of this paper

Date Written: December 1999

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: Public Employment, Redistribution of Income, Public Policy and Economic Behavior of Agents

JEL Classification: H3, J4

Suggested Citation

Alesina, Alberto F. and Danninger, Stephan and Rostagno, Massimo, Redistribution Through Public Employment: The Case of Italy (December 1999). IMF Working Paper No. 99/177, Available at SSRN: https://ssrn.com/abstract=880832

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

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Stephan Danninger

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Massimo Rostagno

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