Redistribution Through Public Employment: The Case of Italy

By Stephan Danninger, Alberto Alesina, Massimo V. Rostagno

December 1, 1999

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Stephan Danninger, Alberto Alesina, and Massimo V. Rostagno Redistribution Through Public Employment: The Case of Italy, (USA: International Monetary Fund, 1999) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Economic sectors, Employment, Labor, Public employment, Public sector, Wages

Keywords: Benchmark wage, Bill of the South, Cost of living, Dependent variable, Employment, Entrepreneurial activity, Price level, Private sector, Public Employment, Public Policy and Economic Behavior of Agents, Public sector, Public sector wage policy, Redistribution of Income, Wage bill, Wage comparison, Wage premium, Wage rate, Wage regression, Wage variation, Wages, Work experience, WP

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/177
Stock No:

WPIEA1771999
ISBN:

9781451858853
ISSN:

1018-5941

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