The Size and Performance of Public Sector Activities in Europe

WIFO Working Paper No. 246/2005

31 Pages Posted: 20 Jun 2011

See all articles by Heinz Handler

Heinz Handler

Austrian Institute of Economic Research (WIFO); Vienna University of Technology - Institute of Statistics and Mathematical Methods in Economics, Research Group Economics (ECON); Policy Crossover Center Vienna-Brussels

Bertrand Koebel

affiliation not provided to SSRN

Philipp Reiss

Maastricht University - Department of Economics

Margit Schratzenstaller

Justus Liebig Universität Giessen

Date Written: February 2005

Abstract

The obvious difference in the economic performance of countries has led to the question why some countries are so much wealthier than others, and whether the size, the structure, and the organisation of the public sector contribute to cross-country income and growth gaps. Public sector activities may have an effect on overall productivity and growth via two channels: Directly by the level and changes of productivity within the public sector, and indirectly by triggering off productivity changes in private production. This paper is concerned with the former aspect. It provides an overview of the size and the structure of the public sector in Europe and compares it with the US and Japan. This is related to the more recent empirical literature on public sector performance. After reviewing some of the measurement issues related to public services, the evidence on the size of government and its performance is analysed. The results on industrial countries are not fully conclusive, but seem to attribute more efficiency to smaller rather than to larger governments. Public sector reforms to consolidate the size of government are therefore likely to enhance the sector's own productivity and thereby positively contribute to overall economic performance.

Keywords: Public sector performance

JEL Classification: H11

Suggested Citation

Handler, Heinz J. and Koebel, Bertrand and Reiss, Philipp and Schratzenstaller, Margit, The Size and Performance of Public Sector Activities in Europe (February 2005). WIFO Working Paper No. 246/2005, Available at SSRN: https://ssrn.com/abstract=1861528 or http://dx.doi.org/10.2139/ssrn.1861528

Heinz J. Handler (Contact Author)

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Arsenal 20
Vienna, A-1103
Austria
+43 1 79826010 (Phone)

HOME PAGE: http://www.wifo.ac.at

Vienna University of Technology - Institute of Statistics and Mathematical Methods in Economics, Research Group Economics (ECON) ( email )

Wiedner Hauptstraße 8/105-3
Vienna, 1040
Austria

HOME PAGE: http://www.econ.tuwien.ac.at

Policy Crossover Center Vienna-Brussels ( email )

Vienna
Austria

Bertrand Koebel

affiliation not provided to SSRN ( email )

Philipp Reiss

Maastricht University - Department of Economics ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Margit Schratzenstaller

Justus Liebig Universität Giessen ( email )

Betriebswirtschaftslehre VII
Giessen, 35394
Germany

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