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Public sector motivation and development failures

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  • Macchiavello, Rocco

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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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 86 (2008)
Issue (Month): 1 (April)
Pages: 201-213

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Handle: RePEc:eee:deveco:v:86:y:2008:i:1:p:201-213

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Web page: http://www.elsevier.com/locate/devec

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Cited by:
  1. Josse Delfgaauw & Robert Dur, 2008. "Managerial Talent, Motivation, and Self-Selection into Public Management," Tinbergen Institute Discussion Papers 08-097/1, Tinbergen Institute.
  2. Esteban Jaimovich & Juan Pablo Rud, 2009. "Excessive Public Employment and Rent-Seeking Traps," Carlo Alberto Notebooks 118, Collegio Carlo Alberto.
  3. Ghatak, Maitreesh & Mueller, Hannes Felix, 2010. "Thanks for Nothing? Not-for-Profits and Motivated Agents," CEPR Discussion Papers 7663, C.E.P.R. Discussion Papers.
  4. Van-Ha Le & Jakob de Haan & Erik Dietzenbacher, 2013. "Do Higher Government Wages Reduce Corruption? Evidence Based on a Novel Dataset," CESifo Working Paper Series 4254, CESifo Group Munich.

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