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Bureaucratic Rents and Life Satisfaction

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  • Simon Luechinger
  • Stephan Meier
  • Alois Stutzer

Abstract

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.

Suggested Citation

  • Simon Luechinger & Stephan Meier & Alois Stutzer, 2006. "Bureaucratic Rents and Life Satisfaction," IEW - Working Papers 269, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:269
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    References listed on IDEAS

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    6. Fisman, Raymond & Gatti, Roberta, 2002. "Decentralization and corruption: evidence across countries," Journal of Public Economics, Elsevier, vol. 83(3), pages 325-345, March.
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    Cited by:

    1. Mirco Tonin & Michael Vlassopoulos, 2015. "Are public sector workers different? Cross-European evidence from elderly workers and retirees," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-21, December.
    2. Simon Luechinger & Stephan Meier & Alois Stutzer, 2010. "Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap Between the Public and the Private Sector," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 998-1045.
    3. Charles B. Blankart, 2016. "Public Choice and Public Finance: A Survey," CESifo Working Paper Series 5819, CESifo Group Munich.
    4. Bhattacharyya, Sambit & Hodler, Roland, 2015. "Media freedom and democracy in the fight against corruption," European Journal of Political Economy, Elsevier, vol. 39(C), pages 13-24.
    5. Duha T. Altindag & Junyue Xu, 2009. "The Impact of Institutions and Development on Happiness," Departmental Working Papers 2009-17, Department of Economics, Louisiana State University.
    6. Andrew E. Clark, 2011. "The organisational commitment of workers in OECD countries," Working Papers halshs-00565205, HAL.
    7. Paul Frijters & David Johnston & Michael Shields, 2012. "The Optimality of Tax Transfers: What does Life Satisfaction Data Tell Us?," Journal of Happiness Studies, Springer, vol. 13(5), pages 821-832, October.
    8. Krause, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute for the Study of Labor (IZA).
    9. Duvanova, Dinissa, 2014. "Economic Regulations, Red Tape, and Bureaucratic Corruption in Post-Communist Economies," World Development, Elsevier, vol. 59(C), pages 298-312.
    10. Simon Luechinger & Stephan Meier & Alois Stutzer, 2010. "Why Does Unemployment Hurt the Employed?: Evidence from the Life Satisfaction Gap Between the Public and the Private Sector," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 998-1045.
    11. Robin Zoutenbier, 2014. "The Impact of Matching Mission Preferences on Well-being at Work," Tinbergen Institute Discussion Papers 14-036/I, Tinbergen Institute.
    12. Natalia Danzer, 2013. "Job Satisfaction and Self-Selection into the Public or Private Sector: Evidence from a Natural Experiment," ifo Working Paper Series 169, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    13. Luminiţa Ionescu & George Lăzăroiu & Gheorghe Iosif, 2012. "Corruption and bureaucracy in public services," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(Special N), pages 665-679, November.
    14. Bruno Frey & Alois Stutzer, 2010. "Happiness and public choice," Public Choice, Springer, vol. 144(3), pages 557-573, September.
    15. Simon Luechinger & Stephan Meier & Alois Stutzer, 2008. "Why does unemployment hurt the employed?: evidence from the life satisfaction gap between the public and private sectors," Public Policy Discussion Paper 08-1, Federal Reserve Bank of Boston.
    16. Charles B. Blankart, 2013. "Public Choice: A Survey," CESifo Working Paper Series 4102, CESifo Group Munich.
    17. Eiji Yamamura, 2012. "The Effects of Information Asymmetry and Government Size on Happiness: A Case Study from Japan," The IUP Journal of Governance and Public Policy, IUP Publications, vol. 0(1), pages 7-20, March.

    More about this item

    Keywords

    public sector; rents; life satisfaction; corruption; judicial independence;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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