The European Union is facing challenges that have important implications for its economy as a whole and for regional cohesion in particular. The transition to the euro had already started, as had the process of enlargement towards Central and Eastern European countries. This occurs against a...

We analyze the optimal regional pattern of public employment in an information-constrained second-best redistribution policy showing that regionally differentiated public employment can serve as an expenditure side tagging device, bypassing or relaxing the equity-effciency trade-off. The optimal...