Does Public Sector Inefficiency Constrain Firm Productivity: Evidence from Italian Provinces
IMF Working Papers, July 21, 2015
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- Does Public Sector Inefficiency Constrain Firm Productivity: Evidence from Italian Provinces
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Bibliographic details
- Authors: Raffaela Giordano, Sergi Lanau, Pietro Tommasino, Petia Topalova
- Published: July 21, 2015
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513580630.001
Key findings
- The paper studies the effect of public sector efficiency on firm productivity using data from more than 400,000 firms across Italy’s provinces.
- Exploiting large heterogeneity in public sector efficiency across Italian provinces and intrinsic variation in the dependence of industries on the government, the study finds that public sector inefficiency significantly reduces the labor productivity of private sector firms.
- If the efficiency in all provinces reached the frontier, output per employee for the average firm would increase by 9 percent.
Data and scope
- Sample: data from more than 400,000 firms across Italy’s provinces.
- Pages: 26
- Series: Working Paper No. 2015/168
- Issue: 168
- Volume: 2015
Authors and publication
- By Raffaela Giordano, Sergi Lanau, Pietro Tommasino, Petia Topalova
- Date: July 21, 2015
- DOI: https://doi.org/10.5089/9781513580630.001
- ISBN: 9781513580630
- ISSN: 1018-5941
- Stock No: WPIEA2015168
Subject areas and keywords
- Subject: Economic sectors, Expenditure, Labor, Labor productivity, Production, Productivity, Public employment, Public expenditure review, Public sector
- Keywords: class size dummy, equivalent firm, firm, firm data, firm level, firm productivity, firm Type, industry X firm size, Labor productivity, Productivity, Public employment, Public expenditure review, Public sector, public sector efficiency, WP
Policy implications and interpretation
- Public sector inefficiency imposes measurable costs on private sector labor productivity.
- Improving public sector efficiency toward the provincial frontier could yield large aggregate gains in output per employee—quantified as a 9 percent increase for the average firm under frontier efficiency.
IMF Working Paper — "Does Public Sector Inefficiency Constrain Firm Productivity: Evidence from Italian Provinces", by Raffaela Giordano, Sergi Lanau, Pietro Tommasino, and Petia Topalova, July 21, 2015.