Redistribution Through Public Employment: The Case of Italy

Author/Editor:

Stephan Danninger ; Alberto Alesina ; Massimo V. Rostagno

Publication Date:

December 1, 1999

Electronic Access:

Free Download. Use the free Adobe Acrobat Reader to view this PDF file

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.

Series:

Working Paper No. 1999/177

Subject:

Economic sectors Employment Labor Public employment Public sector Wages

English

Publication Date:

December 1, 1999

ISBN/ISSN:

9781451858853/1018-5941

Stock No:

WPIEA1771999

Pages:

44

Please address any questions about this title to publications@imf.org