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Bureaucratic Rents and Life Satisfaction

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  • Luechinger, Simon

    ()
    (ETH Zurich)

  • Meier, Stephan

    ()
    (Columbia University)

  • Stutzer, Alois

    ()
    (University of Basel)

Abstract

The monopoly position of the public bureaucracy in providing public services allows government employees to acquire rents. Those rents can involve higher wages, monetary and non-monetary fringe benefits (e.g. pensions and staffing), and/or bribes. We propose a direct measure to capture the total of these rents: the difference in reported subjective well-being between bureaucrats and people working in the private sector. In a sample of 38 countries, we find large variations in the extent of rents in the public bureaucracy. The extent of rents is determined by differences in institutional constraints and correlates with perceptions of corruption. We find judicial independence to be of major relevance for a tamed bureaucracy.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1964.

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Length: 68 pages
Date of creation: Feb 2006
Date of revision:
Publication status: published in: Journal of Law, Economics and Organization, 2008, 24 (2), 476-488
Handle: RePEc:iza:izadps:dp1964

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Keywords: corruption; life satisfaction; rents; public sector; judicial independence;

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  1. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andre Shleifer, 2000. "The Regulation of Entry," Harvard Institute of Economic Research Working Papers 1904, Harvard - Institute of Economic Research.
  2. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
  3. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
  4. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
  5. Ed Diener & Christie Napa-Scollon & Shigehiro Oishi & Vivian Dzokoto & Eunkook Suh, 2000. "Positivity and the Construction of Life Satisfaction Judgments: Global Happiness is not the Sum of its Parts," Journal of Happiness Studies, Springer, vol. 1(2), pages 159-176, June.
  6. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
  7. Bruno S. Frey & Alois Stutzer, . "What can Economists Learn from Happiness Research?," IEW - Working Papers 080, Institute for Empirical Research in Economics - University of Zurich.
  8. Bruno S. Frey & Christine Benesch & Alois Stutzer, . "Does watching TV make us happy?," IEW - Working Papers 241, Institute for Empirical Research in Economics - University of Zurich.
  9. Hanssen, F Andrew, 2000. "Independent Courts and Administrative Agencies: An Empirical Analysis of the States," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 534-71, October.
  10. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, vol. 90(1), pages 194-211, March.
  11. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
  12. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  13. DiTella, Rafael & MacCulloch, Robert, 1999. "Partisan social happiness," ZEI Working Papers B 22-1999, ZEI - Center for European Integration Studies, University of Bonn.
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Cited by:
  1. Charles B. Blankart, 2013. "Public Choice: A Survey," CESifo Working Paper Series 4102, CESifo Group Munich.
  2. Paul Frijters & David W. Johnston & Michael A. Shields, 2012. "The Optimality of Tax Transfers: What does Life Satisfaction Data Tell Us?," Discussion Papers Series 450, School of Economics, University of Queensland, Australia.
  3. Luechinger, Simon & Meier, Stephan & Stutzer, Alois, 2008. "Why Does Unemployment Hurt the Employed? Evidence from the Life Satisfaction Gap between the Public and the Private Sector," IZA Discussion Papers 3385, Institute for the Study of Labor (IZA).
  4. Duha T. Altindag & Junyue Xu, 2011. "The Impact of Institutions and Development on Happiness," Auburn Economics Working Paper Series auwp2011-08, Department of Economics, Auburn University.
  5. Luminiţa Ionescu & George Lăzăroiu & Gheorghe Iosif, 2012. "Corruption and bureaucracy in public services," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(Special N), pages 665-679, November.
  6. Simon Luechinger & Stephan Meier & Alois Stutzer, 2008. "Why does unemployment hurt the employed?: evidence from the life satisfaction gap between the public and private sectors," Public Policy Discussion Paper 08-1, Federal Reserve Bank of Boston.
  7. Yamamura, Eiji, 2010. "The effects of information asymmetry and government size on happiness: A case study from Japan," MPRA Paper 27182, University Library of Munich, Germany.
  8. repec:hal:wpaper:halshs-00565205 is not listed on IDEAS
  9. Tonin, Mirco & Vlassopoulos, Michael, 2014. "Are Public Sector Workers Different? Cross-European Evidence from Elderly Workers and Retirees," IZA Discussion Papers 8238, Institute for the Study of Labor (IZA).
  10. Bruno Frey & Alois Stutzer, 2010. "Happiness and public choice," Public Choice, Springer, vol. 144(3), pages 557-573, September.
  11. Danzer, Natalia, 2013. "Job Satisfaction and Self-Selection into the Public or Private Sector: Evidence from a Natural Experiment," IZA Discussion Papers 7644, Institute for the Study of Labor (IZA).
  12. Robin Zoutenbier, 2014. "The Impact of Matching Mission Preferences on Well-being at Work," Tinbergen Institute Discussion Papers 14-036/I, Tinbergen Institute.

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