Why is the public sector more labor-intensive?
Subtitle: a distortionary tax argument
By: by Panu Poutvaara, Andreas Wagener.
Contributors: Wagener, Andreas.
Series: Discussion paper ;; no. 1413; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) ;; no. 1413
Publisher: IZA
Published: 2004
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Description: "Government-run entities are often more labor-intensive than private companies, even with identical production technologies. This need not imply slack in the public sector, but may be a rational response to its wage tax advantage over private firms. A tax-favored treatment of public production precludes production efficiency. It reduces welfare when labor supply is constant. With an elastic labor supply, a wage tax advantage of the public sector may improve welfare if it allows for a higher net wage. This would counteract the distortion of labor supply arising from wage taxation. Full privatization is never optimal if the labor supply elasticity is positive but small"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 4/13/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.