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Bureaucratic Rents and Life Satisfaction

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  • Luechinger, Simon

    ()
    (University of Lucerne)

  • 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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References

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  1. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521027922.
  2. Hanssen, F Andrew, 2000. "Independent Courts and Administrative Agencies: An Empirical Analysis of the States," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 16(2), pages 534-71, October.
  3. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
  4. 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.
  5. Frey, Bruno S. & Benesch, Christine & Stutzer, Alois, 2007. "Does watching TV make us happy?," Journal of Economic Psychology, Elsevier, Elsevier, vol. 28(3), pages 283-313, June.
  6. Timothy Besley & Maitreesh Ghatak, 2003. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 2202, London School of Economics and Political Science, LSE Library.
  7. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, ZEI - Center for European Integration Studies, University of Bonn.
  8. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
  9. 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, Springer, vol. 1(2), pages 159-176, June.
  10. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, 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, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
  12. DiTella, Rafael & MacCulloch, Robert, 1999. "Partisan social happiness," ZEI Working Papers B 22-1999, ZEI - Center for European Integration Studies, University of Bonn.
  13. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, American Economic Association, vol. 89(4), pages 982-993, September.
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Cited by:
  1. 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).
  2. 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.
  3. Bruno Frey & Alois Stutzer, 2010. "Happiness and public choice," Public Choice, Springer, Springer, vol. 144(3), pages 557-573, September.
  4. repec:hal:wpaper:halshs-00565205 is not listed on IDEAS
  5. 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, Federal Reserve Bank of Boston 08-1, Federal Reserve Bank of Boston.
  6. Simon Luechinger & Stephan Meier & Alois Stutzer, 2010. "Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap Between the Public and the Private Sector," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 998-1045.
  7. Duha T. Altindag & Junyue Xu, . "The Impact of Institutions and Development on Happiness," Departmental Working Papers, Department of Economics, Louisiana State University 2009-17, Department of Economics, Louisiana State University.
  8. Paul Frijters & David Johnston & Michael Shields, 2012. "The Optimality of Tax Transfers: What does Life Satisfaction Data Tell Us?," Journal of Happiness Studies, Springer, Springer, vol. 13(5), pages 821-832, October.
  9. 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.
  10. 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).
  11. Charles B. Blankart, 2013. "Public Choice: A Survey," CESifo Working Paper Series 4102, CESifo Group Munich.
  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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