2023-09-28 14:46:10 +00:00
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abstract: 'We analyze the decision rules governing public employment policy,
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capital allocation between private and public sector, and the size of
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the public sector in a two-type and two-sector optimal nonlinear
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income-tax model with endogenous wages. The government can reduce wage
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inequality in the private sector by employing more unskilled workers and
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fewer skilled workers than is necessary to minimize cost at the
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prevailing gross wage rate and, if skilled labor and capital are
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complementary, by favoring public-sector capital accumulation.
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Therefore, production efficiency holds neither in public employment
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decision nor in capital allocation. The effects of public employment and
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investment on income inequality increase when the size of the public
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sector increases. The optimal size of the public sector is also shown to
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be relatively large when public employment and investments reduce wage
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inequality. These results help explain the growth in the public-sector
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size and why a larger government does not necessarily hamper growth.'
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affiliation: 'Pirttila, J (Corresponding Author), Labour Inst Econ Res, Pitkansillanranta
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3 A, Helsinki 00530, Finland.
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Labour Inst Econ Res, Helsinki 00530, Finland.'
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author: Pirttila, J and Tuomala, M
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author-email: jukka.pirttila@labour.fi
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author_list:
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- family: Pirttila
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given: J
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- family: Tuomala
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given: M
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da: '2023-09-28'
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doi: 10.1628/0015221053722505
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files: []
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issn: 0015-2218
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journal: FINANZARCHIV
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keywords: 'public production; redistribution; nonlinear taxation; production
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efficiency; the size of the government'
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keywords-plus: 'MINIMUM-WAGE LEGISLATION; SELF-SELECTION; PRODUCTION EFFICIENCY; OPTIMAL
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TAXATION; INCOME TAXATION; POLICY; GOODS; PROVISION; GROWTH; DESIGN'
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language: English
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number: '1'
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number-of-cited-references: '33'
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pages: 120-137
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papis_id: 0145a9737875c93e8e1869f7d3b29333
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ref: Pirttila2005publicprivate
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times-cited: '5'
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title: 'Public versus private production decisions: Redistribution and the size of
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the public sector'
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2023-10-01 08:15:07 +00:00
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type: article
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2023-09-28 14:46:10 +00:00
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unique-id: WOS:000230640000006
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usage-count-last-180-days: '0'
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usage-count-since-2013: '0'
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volume: '61'
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web-of-science-categories: Business, Finance; Economics
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year: '2005'
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