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Are bureaucrats paid like CEOs? Performance compensation and turnover of top civil servants

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  • Geys, Benny
  • Heggedal, Tom-Reiel
  • Sørensen, Rune J.

Abstract

Recent research explores the effect of financial and career incentives on public-sector hiring processes and subsequent performance. The reverse relation between performance and bureaucrats' compensation and turnover has received only limited attention. Due to the distinct features of public-sector organizations, bureaucrats are traditionally argued to require either permanent positions and fixed wages, or low-powered performance incentives. This article studies how the performance of top civil servants in Norwegian local governments affects their compensation and turnover. We thereby build on a unique new dataset over the period 1991–2014. Our results indicate that better performing top civil servants obtain a higher compensation and are less likely to be replaced. Nonetheless, these incentives remain low-powered in line with agency theory prescriptions.

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  • Geys, Benny & Heggedal, Tom-Reiel & Sørensen, Rune J., 2017. "Are bureaucrats paid like CEOs? Performance compensation and turnover of top civil servants," Journal of Public Economics, Elsevier, vol. 152(C), pages 47-54.
    • Handle: RePEc:eee:pubeco:v:152:y:2017:i:c:p:47-54
    DOI: 10.1016/j.jpubeco.2017.05.006
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    Cited by:

    1. Goldring, Thomas & Jacob, Brian A. & Kreisman, Daniel & Ricks, Michael D., 2024. "Loopholes and the Incidence of Public Services: Evidence from Funding Career & Technical Education," IZA Discussion Papers 16943, Institute of Labor Economics (IZA).
    2. Clement Olalekan Olaniyi & Olaolu Richard Olayeni, 2020. "A new perspective into the relationship between CEO pay and firm performance: evidence from Nigeria’s listed firms," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(2), pages 250-277, December.
    3. Benny Geys & Rune J. Sørensen, 2020. "Administrative Delegation of Budgetary Powers and Fiscal Performance," Kyklos, Wiley Blackwell, vol. 73(4), pages 477-499, November.
    4. Tukiainen, Janne & Blesse, Sebastian & Bohne, Albrecht & Giuffrida, Leonardo M. & Jääskeläinen, Jan & Luukinen, Ari & Sieppi, Antti, 2021. "What are the priorities of bureaucrats? Evidence from conjoint experiments with procurement officials," ZEW Discussion Papers 21-033, ZEW - Leibniz Centre for European Economic Research.
    5. Amihai Glazer & Hideki Konishi, "undated". "Why High-level Executives Earn Less in the Governmental Than in the Private Sector," Working Papers 2215, Waseda University, Faculty of Political Science and Economics.

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    More about this item

    Keywords

    Bureaucracy; Performance pay; Public administration; Executive compensation; Norway;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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