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Bureaucratic Rents and Life Satisfaction

  • Alois Stutzer

Institutions affect bureaucrats' possibilities to acquire rents; they determine the degree of accountability and responsiveness of officials and of political control of the bureaucracy and, thereby, the size and distribution of rents in the public sphere. Those rents can involve higher wages, monetary and nonmonetary fringe benefits, and bribes. We propose a direct measure to capture the total of these rents: the difference in subjective well-being between bureaucrats and people working in the private sector. In a sample of 42 countries, we find large variations in the extent of rents in the public bureaucracy. The extent of rents is determined by differences in institutional and political constraints. In particular, we find judicial independence to be of major relevance for a tamed bureaucracy. Further, our measure for rents correlates with indicators of regulatory policies and perceptions of corruption. ( JEL D72, D73, I31, J30, J45) The Author 2007. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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Article provided by Oxford University Press in its journal The Journal of Law, Economics, & Organization.

Volume (Year): 24 (2008)
Issue (Month): 2 (October)
Pages: 476-488

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Handle: RePEc:oup:jleorg:v:24:y:2008:i:2:p:476-488
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  1. Djankov, Simeon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," Working Paper Series rwp01-015, Harvard University, John F. Kennedy School of Government.
  2. repec:cup:cbooks:9780521027922 is not listed on IDEAS
  3. Frey, Bruno S. & Benesch, Christine & Stutzer, Alois, 2007. "Does watching TV make us happy?," Journal of Economic Psychology, Elsevier, vol. 28(3), pages 283-313, June.
  4. 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.
  5. 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.
  6. 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.
  7. DiTella, Rafael & MacCulloch, Robert, 1999. "Partisan social happiness," ZEI Working Papers B 22-1999, ZEI - Center for European Integration Studies, University of Bonn.
  8. Besley, Timothy J. & Ghatak, Maitreesh, 2004. "Competition and Incentives with Motivated Agents," CEPR Discussion Papers 4641, C.E.P.R. Discussion Papers.
  9. repec:cup:cbooks:9780521233293 is not listed on IDEAS
  10. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  11. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
  12. Acemoglu, D. & Verdier, T., 1997. "The Choice between Market Failures and Corruption," DELTA Working Papers 97-06, DELTA (Ecole normale supérieure).
  13. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  14. 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.
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