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Public Sector Motivation And Development Failures

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  • Rocco Macchiavello

Abstract

This paper provides a theoretical analysis of the relationship between public sector motivation and development. In the model the public sector produces a public good and workers are heterogeneous in terms of public sector motivation (PSM). Wages in the private sector increase with the quality of the public good. In this context, public sector wage premia (PSWP) have two opposite effects: low PSWP helps screen workers with PSM into the public sector, while high PSWP helps motivate workers to be honest. Raising PSWP may not improve the quality of governance and multiple equilibria might arise. The model highlights that the relative importance of workers selection and provision of "on the job" incentives in the public sector varies in systematic ways with wages in the private sector. We provide anecdotal and original empirical evidence consistent with the theoretical predictions and discuss some policy implications for public sector reforms in developing countries.
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  • Rocco Macchiavello, 2004. "Public Sector Motivation And Development Failures," Royal Economic Society Annual Conference 2004 1, Royal Economic Society.
    • Handle: RePEc:ecj:ac2004:1
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    Cited by:

    1. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 94-105, February.
    2. Eric Rougier & François Combarnous & Yves-André Fauré, 2022. "Political turnover, public employment, and local economic development: New empirical evidence on the impact of local political dynasties in the Brazilian “Nordeste”," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(4), pages 2069-2097, August.
    3. 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.
    4. Gani Aldashev & Esteban Jaimovich & Thierry Verdier, 2018. "Small is Beautiful: Motivational Allocation in the Nonprofit Sector," Journal of the European Economic Association, European Economic Association, vol. 16(3), pages 730-780.
    5. Delfgaauw, Josse & Dur, Robert, 2010. "Managerial talent, motivation, and self-selection into public management," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 654-660, October.
    6. Jaimovich, Esteban & Rud, Juan Pablo, 2014. "Excessive public employment and rent-seeking traps," Journal of Development Economics, Elsevier, vol. 106(C), pages 144-155.
    7. Verdier, Thierry & Aldashev, Gani & Jaimovich, Esteban, 2014. "When warm glow burns: Motivational (mis)allocation in the non-profit sector," CEPR Discussion Papers 9963, C.E.P.R. Discussion Papers.
    8. Barigozzi, Francesca & Manna, Ester, 2020. "Envy in mission-oriented organisations," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 395-424.
    9. Gareth D. Myles & Hana Yousefi, 2020. "Corruption as an Occupational Choice: Endogenous Corruption and Tax Policy," Southern Economic Journal, John Wiley & Sons, vol. 86(4), pages 1446-1474, April.
    10. Federico Ceschel & Alessandro Hinna & Fabian Homberg, 2022. "Public Sector Strategies in Curbing Corruption: A Review of the Literature," Public Organization Review, Springer, vol. 22(3), pages 571-591, September.
    11. Ester Manna, 2017. "Customer‐oriented employees: Blessing or curse for firms?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 842-875, December.
    12. Schwenkenberg Julia M., 2013. "Income Distribution and the Occupational Choices of Entrepreneurs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(1), pages 55-80, November.
    13. De Chiara, Alessandro & Manna, Ester, 2022. "Firms' ownership, employees’ altruism, and product market competition," Economic Modelling, Elsevier, vol. 109(C).
    14. Justin Mattias Valasek, 2015. "Reforming an Institutional Culture of Corruption: A Model of Motivated Agents and Collective Reputation," CESifo Working Paper Series 5599, CESifo.
    15. Mishra, Ajit & Sarangi, Sudipta, 2016. "High-powered incentives and communication failure," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 51-60.
    16. Akimoto, Kiyoka, 2018. "Dynamic analysis of bureaucratic quality and occupational choice," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 199-214.
    17. Van-Ha Le & Jakob de Haan & Erik Dietzenbacher & Jakob de Haan, 2013. "Do Higher Government Wages Reduce Corruption? Evidence Based on a Novel Dataset," CESifo Working Paper Series 4254, CESifo.
    18. Ester Manna, 2023. "Bad NGOs? Competition in the market for donations and workers' misconduct," UB School of Economics Working Papers 2023/457, University of Barcelona School of Economics.
    19. Drugov, Mikhail, 2015. "Optimal Patronage," CEPR Discussion Papers 10343, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P49 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Other

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