Redistribution Through Public Employment: The Case of Italy
44 Pages Posted: 14 Feb 2006
Date Written: December 1999
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: Suggested Citation