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Incentives and Workers’ Motivation in the Public Sector

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  • Josse Delfgaauw
  • Robert Dur

Abstract

Civil servants have a reputation for being lazy. However, people's personal experiences with civil servants frequently run counter to this stereotype. We develop a model of an economy in which workers differ in laziness and in public service motivation, and characterise optimal incentive contracts for public sector workers under different informational assumptions. When civil servants’ effort is unverifiable, lazy workers find working in the public sector highly attractive and may crowd out dedicated workers. When effort is verifiable, a cost‐minimising government optimally attracts dedicated workers as well as the economy's laziest workers by offering separating contracts, which are both distorted.

Suggested Citation

  • Josse Delfgaauw & Robert Dur, 2008. "Incentives and Workers’ Motivation in the Public Sector," Economic Journal, Royal Economic Society, vol. 118(525), pages 171-191, January.
    • Handle: RePEc:wly:econjl:v:118:y:2008:i:525:p:171-191
    DOI: 10.1111/j.1468-0297.2007.02108.x
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    More about this item

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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