Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/109318
Authors: 
Sugden, Craig
Taniguchi, Kiyoshi
Year of Publication: 
2008
Series/Report no.: 
ERD Working Paper Series 118
Abstract: 
This study examines the role of government pay rates in economic growth. A trend decline in government pay rates, expressed relative to what an economy can afford, is identified in many developing countries. The decline is attributed to the erosion of economic rents. Drawing on the theoretical insights of the Harris- Todaro two sector model, the study argues that static and dynamic benefits from the erosion of rents would lead to a negative relationship between government pay rates and economic growth. Utilizing the pooled regression models as well as the feasible two-stage generalized method of moments estimator, the study concludes that relative government pay rates are negatively related with economic growth in developing countries; hence, high government pay rates penalize economic growth. Countries that retain high government pay rates are identified.
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/igo
Document Type: 
Working Paper

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