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The Regional Distribution of Public Employment: Theory and Evidence

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  • Kessing, Sebastian G.

    (University of Siegen)

  • Strozzi, Chiara

    (University of Modena and Reggio Emilia)

Abstract

We analyze the optimal regional pattern of public employment in an information-constrained second-best redistribution policy showing that regionally differentiated public employment can serve as an expenditure side tagging device, bypassing or relaxing the equity-efficiency trade-off. The optimal pattern exhibits higher levels of public employment in low productivity regions and is more pronounced the higher is the degree of regional inequality within the country. Empirically, using a panel of European regions from 1995-2007, we find evidence that public employment is systematically higher in low productivity regions. The latter effect is stronger in countries with higher levels of regional inequality.

Suggested Citation

  • Kessing, Sebastian G. & Strozzi, Chiara, 2012. "The Regional Distribution of Public Employment: Theory and Evidence," IZA Discussion Papers 6449, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6449
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    1. Sebastian G. Kessing & Chiara Strozzi, 2017. "The regional distribution of public employment: theory and evidence," Regional Studies, Taylor & Francis Journals, vol. 51(7), pages 1100-1114, July.
    2. OBARA, Takuya, 2016. "Differential Income Taxation and Tiebout Sorting," CCES Discussion Paper Series 64_v2, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    3. Jean d’Amour Banyanga & Kaj Björkqvist & Karin Österman, 2020. "Coping Strategies and Psychological Interventions Among Traumatized African Migrants in the Western World: a Comparison Between Rwandans in Finland and Belgium," European Journal of Social Sciences Education and Research Articles, Revistia Research and Publishing, vol. 7, ejser_v7_.

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    More about this item

    Keywords

    public employment; redistribution; regional inequality; European regions;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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