publication . Article . 2016

Labour Costs and the Size of Government

François Facchini; Mickael Melki; Andrew Pickering;
Open Access English
  • Published: 20 Jun 2016
  • Publisher: HAL CCSD
Abstract
International audience; Given inelastic demand for labour‐intensive public services, the size of government depends positively on labour costs. OECD data exhibit a strong statistical association between government size and the business‐sector labour share of income. When the labour share is instrumented with measures of technological change, institutional variation and predetermined data it continues to positively impact government size. In contrast, transfer spending is unaffected by the labour share. The evidence is consistent with the idea that the recent decline in the labour share has contributed to the slowdown in the growth of government witnessed in much...
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Subjects
free text keywords: public spending, Baumol Law and Labor Share, [QFIN]Quantitative Finance [q-fin], 2000, Statistics, Probability and Uncertainty, Economics and Econometrics, Statistics and Probability, Social Sciences (miscellaneous), Correlation and dependence, Price elasticity of demand, Public spending, Wage share, Government, Labour economics, Technological change, Economics
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