Time Consistency and Bureaucratic Budget Competition
AbstractHigh employment protection in the public sector results in strategic over-employment if government divisions compete for budgets in a dynamic setting. Bureaucrats who are interested in maximising their divisions' output employ excess labour, since this induces the sponsor to provide complementary inputs in the future. Restrictions on hiring decisions in the public sector can be regarded as provisions to reduce strategic hiring. We also provide evidence from a survey of decision makers in a public sector bureaucracy with very high employment protection. The results confirm that decision makers are aware of the strategic effects of their hiring decisions on budget allocation. Copyright 2008 The Author(s). Journal compilation Royal Economic Society 2008.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 118 (2008)
Issue (Month): 525 (01)
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Other versions of this item:
- Sebastian Kessing & Kai A. Konrad, 2006. "Time Consistency and Bureaucratic Budget Competition," CESifo Working Paper Series 1791, CESifo Group Munich.
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
- H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
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