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On Selection into Public Civil Service

  • Tobias Böhm
  • Nadine Riedel

This article investigates whether the institution of life-time tenure for public sector workers affects the selection of workers into private and public sector occupations. Precisely, we argue that more generous employment protection for public sector workers may induce risk averse individuals to select into public sector employment even if they have a low intrinsic motivation and talent for this type of occupation. To empirically assess this effect, we use Germany as a testing ground and exploit changes in employment protection induced by the German reunification in 1990 as a source for identification. Specifically, while occupational choices in West Germany (Federal Republic of Germany) and post reunification East Germany may be affected by the described security motive, workers in pre reunification East Germany (German Democratic Republic, GDR) enjoyed an employment guarantee irrespective of their occupation. Using data from the German Socioeconomic Panel, we employ a difference-in-differences approach and use absenteeism as a proxy for intrinsic worker motivation and productivity. The results suggest a significant selection effect: public sector employees who chose their occupation in the FRG report more days of absence relative to comparable private sector workers than the control group of public sector workers who chose their occupation in the former GDR. This effect turns out to be robust against controlling for potential socioeconomic and cultural differences between the groups. (JEL codes: J45, J5, H8) Copyright The Author 2012. Published by Oxford University Press on behalf of Ifo Institute, Munich. All rights reserved. For permissions, please email: journals.permissions@oup.com, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/cesifo/ifs037
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Article provided by CESifo in its journal CESifo Economic Studies.

Volume (Year): 59 (2013)
Issue (Month): 1 (March)
Pages: 34-71

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Handle: RePEc:oup:cesifo:v:59:y:2013:i:1:p:34-71
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  1. Riphahn, Regina T., 2004. "Employment protection and effort among German employees," Economics Letters, Elsevier, vol. 85(3), pages 353-357, December.
  2. Tim Besley & Maitreesh Ghatak, 2005. "Competition and incentives with motivated agents," LSE Research Online Documents on Economics 928, London School of Economics and Political Science, LSE Library.
  3. Ichino, Andrea & Riphahn, Regina, 2003. "The Effect of Employment Protection on Worker Effort: A Comparison of Absenteeism During and After Probation," CEPR Discussion Papers 3847, C.E.P.R. Discussion Papers.
  4. Ziebarth N & Karlsson M, 2009. "A Natural Experiment on Sick Pay Cuts, Sickness Absence, and Labor Costs," Health, Econometrics and Data Group (HEDG) Working Papers 09/34, HEDG, c/o Department of Economics, University of York.
  5. Josse Delfgaauw & Robert Dur, 2003. "Signaling and Screening of Workers' motivation," CESifo Working Paper Series 1099, CESifo Group Munich.
  6. Regina T. Riphahn & Anja Thalmaier, 2001. "Behavioral Effects of Probation Periods: An Analysis of Worker Absenteeism," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 221(2), pages 179-201.
  7. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 285-300, Summer.
  8. Sinan Aral & Erik Brynjolfsson & Marshall Van Alstyne, 2007. "Information, Technology and Information Worker Productivity: Task Level Evidence," NBER Working Papers 13172, National Bureau of Economic Research, Inc.
  9. Francois, Patrick, 2000. "'Public service motivation' as an argument for government provision," Journal of Public Economics, Elsevier, vol. 78(3), pages 275-299, November.
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