Does Public Sector Inefficiency Constrain Firm Productivity : Evidence from Italian Provinces

This paper studies the effect of public sector efficiency on firm productivity using data from more than 400,000 firms across Italy's provinces. Exploiting the large heterogeneity in the efficiency of the public sector across Italian provinces and the intrinsic variation in the dependence of in...

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Main Author: Giordano, Raffaela
Other Authors: Lanau, Sergi, Tommasino, Pietro, Topalova, Petia
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2015, 2015
Series:IMF Working Papers; Working Paper
Subjects:
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Collection: International Monetary Fund - Collection details see MPG.ReNa
Summary:This paper studies the effect of public sector efficiency on firm productivity using data from more than 400,000 firms across Italy's provinces. Exploiting the large heterogeneity in the efficiency of the public sector across Italian provinces and the intrinsic variation in the dependence of industries on the government, we find that public sector inefficiency significantly reduces the labor productivity of private sector firms. The results suggest that raising public sector efficiency could yield large economic benefits: if the efficiency in all provinces reached the frontier, output per employee for the average firm would increase by 9 percent
Physical Description:26 p.
ISBN:9781513580630
1513580639