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Dynamic reform of public institutions: A model of motivated agents and collective reputation

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  • Valasek, Justin

Abstract

State capacity is optimized when public institutions are staffed by individuals with public-service motivation. However, when motivated agents value the collective reputation of their place of employment, steady-state equilibria with both high and low aggregate motivation (reputation) in the mission-oriented sector exist. Reforming a low-motivation institution requires a non-monotonic wage path: since the effect of higher wages on motivation is negative for a high-reputation institution, but positive for a low-reputation institution, a transition to a high-reputation steady state requires an initial wage increase to crowd motivated workers in, followed by a wage decrease to crowd non-motivated workers out.

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  • Valasek, Justin, 2018. "Dynamic reform of public institutions: A model of motivated agents and collective reputation," Journal of Public Economics, Elsevier, vol. 168(C), pages 94-108.
    • Handle: RePEc:eee:pubeco:v:168:y:2018:i:c:p:94-108
    DOI: 10.1016/j.jpubeco.2018.10.005
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    3. Badri Munir Sukoco & Beta Embriyono Adna & Zainul Musthofa & Reza Ashari Nasution & Dwi Ratmawati, 2022. "Middle Managers’ Cognitive Styles, Capacity for Change, and Organizational Performance," SAGE Open, , vol. 12(1), pages 21582440221, March.
    4. repec:bla:annpce:v:89:y:2018:i:1:p:157-174 is not listed on IDEAS
    5. Sebastian Kot & Róbert Štefko & Ján Dobrovič & Rastislav Rajnoha & Jan Váchal, 2019. "The Main Performance and Effectiveness Factors of Sustainable Financial Administration Reform Using Multidimensional Statistical Tools," Sustainability, MDPI, vol. 11(13), pages 1-21, June.

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    More about this item

    Keywords

    Motivated workers; Institutional reform; Public sector;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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