What Drives Public Employment in Developing Countries?

15 Pages Posted: 29 Jan 2016

See all articles by Dani Rodrik

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: October 2000

Abstract

An excessive level of employment is a frequent complaint made about public‐sector governance in developing economies. The explanation typically offered is that governments use public‐sector employment as a tool for generating and redistributing rents. This article suggests an alternative hypothesis: relatively safe government jobs represent partial insurance againstundiversifiable external risk faced by the domestic economy. I show that countries that are greatly exposed to external risk have higher levels of government employment and have experienced faster rates of growth of government consumption. The basic finding on this (partial) correlation is robust against the hypotheses typically offered.

Suggested Citation

Rodrik, Dani, What Drives Public Employment in Developing Countries? (October 2000). Review of Development Economics, Vol. 4, Issue 3, pp. 229-243, 2000. Available at SSRN: https://ssrn.com/abstract=2724246 or http://dx.doi.org/10.1111/1467-9361.00091

Dani Rodrik (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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HOME PAGE: http://www.ksg.harvard.edu/rodrik/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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