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Client Service and the Growth of Government

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  • Jean Guillaume Forand

    (Department of Economics, University of Waterloo)

Abstract

I study a dynamic model of electoral accountability which links the scale of government activity to the presence of civil service protections. In the model, voters with a demand for public goods forward tax revenue to the government and office-motivated governing parties delegate public spending to career-concerned civil servants. Governments always have power over civil service compensation, but civil service protections limit their ability to hire and fire civil servants. If civil servants are unprotected, civil service turnover matches government turnover and civil servants' interests are aligned with those of the party that hires them. To avoid wasteful partisan spending, voters only consent to minimal taxation. If civil servants are protected, they have no incentive to favour one party over another and governments produce only public goods, so that, in turn, voters consent to high taxes. However, because higher tax revenues increase the corruptibility of civil servants through favourable compensation policies, large-scale government activity is only achieved by inefficiently high wages in the civil service, which increase the frictions in the relationship between politicians and civil servants.

Suggested Citation

  • Jean Guillaume Forand, 2017. "Client Service and the Growth of Government," Working Papers 1704, University of Waterloo, Department of Economics, revised Sep 2017.
  • Handle: RePEc:wat:wpaper:1704
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    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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