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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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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2004 with number 1.

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Date of creation: 17 Sep 2004
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Handle: RePEc:ecj:ac2004:1

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  1. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by:
  1. 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.
  2. Esteban Jaimovich & Juan Pablo Rud, 2009. "Excessive Public Employment and Rent-Seeking Traps," Carlo Alberto Notebooks 118, Collegio Carlo Alberto.
  3. Maitreesh Ghatak & Hannes Mueller, 2009. "Thanks for Nothing? Not-for-Profits and Motivated Agents," STICERD - Economic Organisation and Public Policy Discussion Papers Series 014, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  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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