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Time consistency and bureaucratic budget competition

Author

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  • Konrad, Kai A.
  • Kessing, Sebastian G.

Abstract

High employment protection in the public sector results in strategic over-employment if government divisions compete for budgets in a dynamic setting. Bureaucrats who are interested in maximising their divisions' output employ excess labour, since this induces the sponsor to provide complementary inputs in the future. Restrictions on hiring decisions in the public sector can be regarded as provisions to reduce strategic hiring. We also provide evidence from a survey of decision makers in a public sector bureaucracy with very high employment protection. The results confirm that decision makers are aware of the strategic effects of their hiring decisions on budget allocation. © 2008 The Author(s). Journal compilation Royal Economic Society 2008.

Suggested Citation

  • Konrad, Kai A. & Kessing, Sebastian G., 2008. "Time consistency and bureaucratic budget competition," Munich Reprints in Economics 22090, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:22090
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    References listed on IDEAS

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    1. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    2. Glazer, Amihai, 1989. "Politics and the Choice of Durability," American Economic Review, American Economic Association, vol. 79(5), pages 1207-1213, December.
    3. Alesina, Alberto & Baqir, Reza & Easterly, William, 2000. "Redistributive Public Employment," Journal of Urban Economics, Elsevier, vol. 48(2), pages 219-241, September.
    4. Dani Rodrik, 2000. "What Drives Public Employment in Developing Countries?," Review of Development Economics, Wiley Blackwell, vol. 4(3), pages 229-243, October.
    5. Gelb, A & Knight, John B & Sabot, R H, 1991. "Public Sector Employment, Rent Seeking and Economic Growth," Economic Journal, Royal Economic Society, vol. 101(408), pages 1186-1199, September.
    6. Gordon, Roger H, 2001. "Taxes and Privatization," CEPR Discussion Papers 2977, C.E.P.R. Discussion Papers.
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    Cited by:

    1. repec:taf:regstd:v:51:y:2017:i:7:p:1100-1114 is not listed on IDEAS
    2. Marcus Drometer, 2012. "Bureaucrats and short-term politics," Public Choice, Springer, vol. 151(1), pages 149-163, April.
    3. Sebastian G. Kessing & Chiara Strozzi, 2017. "The regional distribution of public employment: theory and evidence," Regional Studies, Taylor & Francis Journals, vol. 51(7), pages 1100-1114, July.

    More about this item

    Keywords

    bureaucracy; decision making; employment; public sector; resource allocation;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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