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What is the relation between public manager compensation and government effectiveness? An explorative analysis with public management implications

Public managers play a central role in public administration to support the overall efficiency with appropriate public policies. In several countries, the public considers the central government senior managers overpaid. These executive compensations tend to be considered disproportionate and in-equitable in relation to the activity and results of public managers. A growing literature has analysed the possible determinants and consequences of higher levels of compensation in public and private organizations. However, a main question unknown is how the levels of compensation of public managers are related to the capacity of the government to effectively formulate and implement sound policies. The findings of this study, based on OECD and World Bank data, show that the government effectiveness and regulatory quality of nations seem to be negatively associated to high levels of compensation for central government senior manager, standardized with GDP per capita of countries. This study also shows that some possible factors of the findings can be due to low level of freedom of expression, rule of law and corruption control of some countries. These results provide fruitful insights to support best practices in public administration based on salaries in-centiveoriented that may stimulate public managers’ work and enhance the national government effectiveness of countries.

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Paper provided by Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY in its series quaderni IRCrES with number 201701.

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Length: 41 pages
Date of creation: Jan 2017
Handle: RePEc:csc:ircrqu:201701
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