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Lewis through a looking glass : public sector employment, rent-seeking, and economic growth, Volume 1
Author:Gelb, Alan; Sabot, Richard H.; Knight, John B.; Collection Title:Policy, Planning and Research Department working papers ; no. WPS 133
Date Stored:1988/11/01Document Date:1988/11/30
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Economic Theory & Research; Banks & Banking Reform; Health Monitoring & Evaluation; Public Sector Economics
Language:EnglishMajor Sector:(Historic)Social Protection
Report Number:WPS133Sub Sectors:Labor Markets & Employment
Volume No:1  

Summary: This paper argues that the labor transfer process outlined by the Lewis model (1954) can give rise to surplus labour - in the sense than the marginal product of labour is less that the wage - in the public part of the modern sector and that this may deprive the modern sector of its dynamism. Moreover, creating sheltered employment tends to be self-perpetuating. It creates and consolidates vested interests that seek to perpetuate the protected jobs. In the inverse of the Lewis model, the extent of surplus labour increases, rather than diminishes, over time.

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