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Fiscal Austerity and Public Servant Quality


  • Haque, Nadeem Ul
  • Montiel, Peter
  • Sheppard, Stephen


In this article we use a simple model to analyze the forces that determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy which maximizes a utility function U(s, Y) that depends on the share of the labor force employed in public services and private sector output Y. The government is fully informed about worker productivity. We characterize the behavior of the public sector, and explore the efficiency and employment consequences of imposing fiscal constraint on the government. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Haque, Nadeem Ul & Montiel, Peter & Sheppard, Stephen, 2000. "Fiscal Austerity and Public Servant Quality," Economic Inquiry, Western Economic Association International, vol. 38(3), pages 487-500, July.
  • Handle: RePEc:oup:ecinqu:v:38:y:2000:i:3:p:487-500

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    References listed on IDEAS

    1. Ferguson, D G, , et al, 1991. "The Pricing of Sports Events: Do Teams Maximize Profit?," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 297-310, March.
    2. Spence, Michael, 1976. "Product Differentiation and Welfare," American Economic Review, American Economic Association, vol. 66(2), pages 407-414, May.
    3. Whitney, James D, 1993. "Bidding Till Bankrupt: Destructive Competition in Professional Team Sports," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 100-115, January.
    4. Avinash Dixit, 1979. "Quality and Quantity Competition," Review of Economic Studies, Oxford University Press, vol. 46(4), pages 587-599.
    5. Scully, Gerald W., 1995. "The Market Structure of Sports," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226743950.
    6. A. Michael Spence, 1975. "Monopoly, Quality, and Regulation," Bell Journal of Economics, The RAND Corporation, vol. 6(2), pages 417-429, Autumn.
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    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods


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