Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/58435
Authors: 
Kessing, Sebastian G.
Strozzi, Chiara
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6449
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.
Subjects: 
public employment
redistribution
regional inequality
European regions
JEL: 
H11
J45
R12
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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