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Public Sector Motivation and Development Failures

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  • Rocco Macchiavello

Abstract

This paper provides a theoretical analysis of the relationship between public sector motivation and development. In the model the public sector produces a public good and workers are heterogeneous in terms of public sector motivation (PSM). Wages in the private sector increase with the quality of the public good. In this context, public sector wage premia (PSWP) have two opposite effects: low PSWP helps screen workers with PSM into the public sector, while high PSWP helps motivate workers to be honest. Raising PSWP may not improve the quality of governance and multiple equilibria might arise. The model highlights that the relative importance of workers selection and provision of on the job incentives in the public sector varies in systematic ways with wages in the private sector. We provide anecdotal and original empirical evidence consistent with the theoretical predictions and discuss some policy implications for public sector reforms in developing countries.

Suggested Citation

  • Rocco Macchiavello, 2007. "Public Sector Motivation and Development Failures," Economics Series Working Papers 332, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:332
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jaimovich, Esteban & Rud, Juan Pablo, 2014. "Excessive public employment and rent-seeking traps," Journal of Development Economics, Elsevier, vol. 106(C), pages 144-155.
    2. Schwenkenberg Julia M., 2013. "Income Distribution and the Occupational Choices of Entrepreneurs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(1), pages 55-80, November.
    3. Justin Mattias Valasek, 2015. "Reforming an Institutional Culture of Corruption: A Model of Motivated Agents and Collective Reputation," CESifo Working Paper Series 5599, CESifo Group Munich.
    4. Mishra, Ajit & Sarangi, Sudipta, 2016. "High-powered incentives and communication failure," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 51-60.
    5. Delfgaauw, Josse & Dur, Robert, 2010. "Managerial talent, motivation, and self-selection into public management," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 654-660, October.
    6. F. Barigozzi & E. Manna, 2017. "Envy in Mission-Oriented Organizations," Working Papers wp1108, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 94-105, February.
    8. Gani Aldashev & Esteban Jaimovich & Thierry Verdier, 2016. "Small is Beautiful: Motivational Allocation in the Non-Profit Sector," Working Papers ECARES ECARES 2016-02, ULB -- Universite Libre de Bruxelles.
    9. Aldashev, Gani & Jaimovich, Esteban & Verdier, Thierry, 2014. "When warm glow burns: Motivational (mis)allocation in the non-profit sector," CEPR Discussion Papers 9963, C.E.P.R. Discussion Papers.
    10. Valasek, Justin, 2016. "Dynamic reform of public institutions: A model of motivated agents and collective reputation," Discussion Papers, Research Unit: Economics of Change SP II 2015-303r, Social Science Research Center Berlin (WZB).
    11. Van-Ha Le & Jakob de Haan & Erik Dietzenbacher, 2013. "Do Higher Government Wages Reduce Corruption? Evidence Based on a Novel Dataset," CESifo Working Paper Series 4254, CESifo Group Munich.
    12. Drugov, Mikhail, 2015. "Optimal Patronage," CEPR Discussion Papers 10343, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    Public Sector Motivation; Developing Countries; Corruption; Multiple Equilibria;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • P49 - Economic Systems - - Other Economic Systems - - - Other

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