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Fiscal Austerity and Public Servant Quality


  • Nadeem Ul Haque

    (International Monetary Fund)

  • Peter Montiel

    (Williams College)

  • Stephen Sheppard

    (Oberlin College)


In this paper we use a simple model to analyze the forces which determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy which maximizes a social welfare function $U(s,Y)$ which depends on the share of the labor force employed in public service $s$ and private sector output $Y$. The government is fully informed about worker productivity. By examining the welfare properties of the possible outcomes, we are able to illuminate situations in which policies which seek to constrain the public sector may or may not improve economic efficiency.

Suggested Citation

  • Nadeem Ul Haque & Peter Montiel & Stephen Sheppard, 1997. "Fiscal Austerity and Public Servant Quality," Public Economics 9705003, University Library of Munich, Germany, revised 09 Jun 1997.
  • Handle: RePEc:wpa:wuwppe:9705003
    Note: Type of Document - Postcript prepared on Win95 Scientific Workplace; to print on PostScript; pages: 15; figures: included.

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    Public Sector Efficiency; public sector labor markets; fiscal constraints;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods


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