Publication:
Optimal Public Sector Premium, Talent Misallocation, and Aggregate Productivity: Evidence from the Middle East and North Africa

Simple item page
dc.contributor.authorParro, Francisco
dc.contributor.authorTorres, Jesica
dc.date.accessioned2024-11-06T20:56:54Z
dc.date.available2024-11-06T20:56:54Z
dc.date.issued2024-11-06
dc.description.abstractThis paper develops a tractable general equilibrium model to quantify the aggregate productivity gains from adjusting the public sector premium and the size of the public sector to their optimal levels. In the framework, the optimal size of the public sector is contingent on the efficiency level of public goods in increasing the productivity of the private sector. The model also incorporates an endogenous decision between market and non-market activities for women. The model is calibrated using data from the Arab Republic of Egypt, a country that exhibits a disproportionate share of workers, and women especially, in the public sector. The findings show that, under a conservative value for the efficiency of the public sector, aligning the public sector premium with its optimal level, thus lowering the share of employment in the public sector, results in aggregate efficiency gains of 12 percent for output per worker and 8 percent for total factor productivity. For lower values of the elasticity of private output to public goods, the productivity gains are almost twice as large. The optimal premium is positive for women and approaches zero for men, preventing a shift of mid-high-level skilled women from the public sector to non-market activities and also a contraction of the male entrepreneurial sector. Notably, a reduced female public sector premium fosters greater female labor force participation in market activities through an expansion of the female entrepreneurial sector, which increases the demand for production labor and drives wages up.en
dc.identifierhttp://documents.worldbank.org/curated/en/099735010312410035/IDU16e83790b1fccf14e1819daa1ea0759cad2fa
dc.identifier.doi10.1596/1813-9450-10963
dc.identifier.urihttps://hdl.handle.net/10986/42370
dc.languageEnglish
dc.language.isoen_US
dc.publisherWashington, DC: World Bank
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttps://creativecommons.org/licenses/by/3.0/igo/
dc.subjectMISALLOCATION
dc.subjectPUBLIC SECTOR EMPLOYMENT
dc.subjectAGGREGATE PRODUCTIVITY
dc.subjectFEMALE LABOR FORCE PARTICIPATION
dc.titleOptimal Public Sector Premium, Talent Misallocation, and Aggregate Productivityen
dc.title.subtitleEvidence from the Middle East and North Africaen
dc.typeWorking Paper
dspace.entity.typePublication
okr.crossref.titleOptimal Public Sector Premium, Talent Misallocation, and Aggregate Productivity: Evidence from the Middle East and North Africa
okr.date.disclosure2024-11-06
okr.date.doiregistration2025-04-25T02:24:47.714428Z
okr.date.lastmodified2024-10-31T00:00:00Zen
okr.doctypePolicy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/099735010312410035/IDU16e83790b1fccf14e1819daa1ea0759cad2fa
okr.guid099735010312410035
okr.identifier.docmidIDU-6e83790b-fccf-4e18-9daa-ea0759cad2fa
okr.identifier.doi10.1596/1813-9450-10963
okr.identifier.doihttps://doi.org/10.1596/1813-9450-10963
okr.identifier.externaldocumentum34415363
okr.identifier.internaldocumentum34415363
okr.identifier.reportWPS10963
okr.import.id5706
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/099735010312410035/pdf/IDU16e83790b1fccf14e1819daa1ea0759cad2fa.pdfen
okr.region.geographicalMiddle East
okr.region.geographicalNorth Africa
okr.topicMacroeconomics and Economic Growth::Economic Policy, Institutions and Governance
okr.topicMacroeconomics and Economic Growth::Fiscal & Monetary Policy
okr.topicSocial Protections and Labor::Labor Markets
okr.topicMacroeconomics and Economic Growth::Economic Development
okr.unitOffice of the Chief Economist (MNACE)
relation.isAuthorOfPublicationecb386cc-60ee-44ae-8ae1-038d364519e0
relation.isAuthorOfPublication.latestForDiscoveryecb386cc-60ee-44ae-8ae1-038d364519e0
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
Files
Original bundle
Now showing 1 - 2 of 2
Thumbnail Image
Name:
IDU16e83790b1fccf14e1819daa1ea0759cad2fa.pdf
Size:
1008.48 KB
Format:
Adobe Portable Document Format
Download
No Thumbnail Available
Name:
IDU16e83790b1fccf14e1819daa1ea0759cad2fa.txt
Size:
113.73 KB
Format:
Plain Text
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers