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Bureaucratic Rents and Life Satisfaction

  • Luechinger, Simon

    ()

    (University of Lucerne)

  • Meier, Stephan

    ()

    (Columbia University)

  • Stutzer, Alois

    ()

    (University of Basel)

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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File URL: http://ftp.iza.org/dp1964.pdf
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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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  1. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
  2. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, University of Bonn, ZEI - Center for European Integration Studies.
  3. DiTella, Rafael & MacCulloch, Robert, 1999. "Partisan social happiness," ZEI Working Papers B 22-1999, University of Bonn, ZEI - Center for European Integration Studies.
  4. Bruno S. Frey & Christine Benesch & Alois Stutzer, 2005. "Does Watching TV Make Us Happy?," CREMA Working Paper Series 2005-15, Center for Research in Economics, Management and the Arts (CREMA).
  5. 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.
  6. Djankov, Simeon & La Porta, Rafael & Shleifer, Andrei & Lopez de Silanes, Florencio, 2001. "The regulation of entry," Policy Research Working Paper Series 2661, The World Bank.
  7. 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.
  8. Thierry Verdier & Daron Acemoglu, 2000. "The Choice between Market Failures and Corruption," American Economic Review, American Economic Association, vol. 90(1), pages 194-211, March.
  9. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  10. 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.
  11. 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.
  12. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  13. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, June.
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