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 labor, 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.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1791.
Date of creation: 2006
Date of revision:
bureaucratic competition; time consistency; labor intensity; public sector;
Other versions of this item:
- KaiA. Konrad & SebastianG. Kessing, 2008. "Time Consistency and Bureaucratic Budget Competition," Economic Journal, Royal Economic Society, vol. 118(525), pages 1-15, 01.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-07 (All new papers)
- NEP-CDM-2006-10-07 (Collective Decision-Making)
- NEP-PBE-2006-10-07 (Public Economics)
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