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Perverse Incentives? Labor Market Regulation and Performance in the Public Sector

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  • Alberto Chong
  • Angelo Cozzubo

Abstract

We test the link between labor market regulations and job performance in the public sector using a novel outcome variable, namely, the number of days it takes the postal service to return letters sent to nonexistent foreign addresses, a measure that we argue is an excellent proxy for job performance. We find a positive and statistically significant link between these two variables, regardless of the labor regulation measure employed, changes in specification, and even unlikely endogeneity considerations, which suggest that this finding may be causal.

Suggested Citation

  • Alberto Chong & Angelo Cozzubo, 2019. "Perverse Incentives? Labor Market Regulation and Performance in the Public Sector," Southern Economic Journal, John Wiley & Sons, vol. 86(1), pages 271-285, July.
    • Handle: RePEc:wly:soecon:v:86:y:2019:i:1:p:271-285
    DOI: 10.1002/soej.12367
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    References listed on IDEAS

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