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Public sector motivation and development failures

Macchiavello, Rocco (2008) Public sector motivation and development failures. Journal of Development Economics, 86 (1). pp. 201-213. ISSN 0304-3878

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Identification Number: 10.1016/j.jdeveco.2007.06.003

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.

Item Type: Article
Official URL: http://www.journals.elsevier.com/journal-of-develo...
Additional Information: © 2007 Elsevier B.V
Divisions: Management
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
H - Public Economics > H1 - Structure and Scope of Government > H10 - General
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
P - Economic Systems > P4 - Other Economic Systems > P49 - Other
Sets: Departments > Management
Date Deposited: 03 Nov 2016 14:54
Last Modified: 20 Feb 2019 09:08
URI: http://eprints.lse.ac.uk/id/eprint/68222

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