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Bureaucratic Rents and Life Satisfaction

  • Simon Luechinger
  • Stephan Meier
  • Alois Stutzer

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.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 269.

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Date of creation: Jan 2006
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Handle: RePEc:zur:iewwpx:269
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  1. Bruno S. Frey & Christine Benesch & Alois Stutzer, . "Does watching TV make us happy?," IEW - Working Papers 241, Institute for Empirical Research in Economics - University of Zurich.
  2. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
  3. repec:cup:cbooks:9780521233293 is not listed on IDEAS
  4. Djankov, Simeon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," Working Paper Series rwp01-015, Harvard University, John F. Kennedy School of Government.
  5. Acemoglu, D. & Verdier, T., 1997. "The Choice between Market Failures and Corruption," DELTA Working Papers 97-06, DELTA (Ecole normale supérieure).
  6. Rafael Di Tella & Alberto Ades, 1999. "Rents, Competition, and Corruption," American Economic Review, American Economic Association, vol. 89(4), pages 982-993, September.
  7. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  8. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
  9. Hanssen, F Andrew, 2000. "Independent Courts and Administrative Agencies: An Empirical Analysis of the States," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 534-71, October.
  10. Rafael Di Tella & Robert MacCulloch, 2005. "Partisan Social Happiness," Review of Economic Studies, Oxford University Press, vol. 72(2), pages 367-393.
  11. Fisman, Raymond & Gatti, Roberta, 2000. "Decentralization and corruption - evidence across countries," Policy Research Working Paper Series 2290, The World Bank.
  12. Ed Diener & Christie Napa-Scollon & Shigehiro Oishi & Vivian Dzokoto & Eunkook Suh, 2000. "Positivity and the Construction of Life Satisfaction Judgments: Global Happiness is not the Sum of its Parts," Journal of Happiness Studies, Springer, vol. 1(2), pages 159-176, June.
  13. Gregory, Robert G. & Borland, Jeff, 1999. "Recent developments in public sector labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 53, pages 3573-3630 Elsevier.
  14. repec:cup:cbooks:9780521027922 is not listed on IDEAS
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