Planes, prices, and pay : contributions to the economics of the public sector and public infrastructure

Abstract

The public sector and public infrastructure are essential components of a well-functioning society and economy, improving quality of life for citizens, supporting economic growth, and promoting equality. Thus, this thesis focuses on investigating whether the public sector and public infrastructure play a positive role in improving social welfare as the governments planned, drawing on evidence from China and the UK. Chapter 2 explores the wage inequality between the public and private sectors in China from 2002 to 2013. This chapter finds that the effect of the public sector on wage is diminishing, and the evolution of the wage inequality between sectors can be largely attributed to the increasing significance of the differences in individual characteristics rather than the wage structure effect. This implies that the public sector had lost its previously absolute dominance in the labour market, which, to some extent, enhanced work productivity, fostered social equality, and promoted economic growth in China. Governments often construct new public infrastructure to improve local economic and accelerate urbanization. Chapter 3 and 4 apply a case study of Doncaster Sheffield Airport to estimate the price of a public infrastructure on local economy. Chapter 3 suggests that the announcement effect of a new airport resulted a significant decline in regional property prices. Chapter 4 indicates the commercial airport plan could trigger a short-term decrease in neighbourhood house prices. The decreasing property price from both chapters shows that to nearby residents, the positive development benefits of an airport in terms of access and employment opportunities may not outweigh the negative impact, such as the cost of higher noise levels and congestion, etc. This thesis highlights that the price of a poorly functioning public sector and public infrastructure cannot be ignored as an inefficient resource allocation can cause economic decline, reduce quality of life, and exacerbate social inequality.