price versus quantity in a mixed duopoly abstract we revisit the classic discussion of the endogenous choice of a price or a quantity contract but in a mixed duopoly we find that choosing the price contract is a dominant strategy for both firms whether the goods are substitutes or complements

the value of hiring through employee referrals using personnel data from nine large firms in three industries call centers trucking and high tech we empirically assess the benefit to firms of hiring through employee referrals compared to nonreferred applicants referred applicants are more likely to be hired and more likely to accept offers even though referrals and nonreferrals have similar skill characteristics referred workers tend to have similar productivity compared to nonreferred workers on most measures but referred workers have lower accident rates in trucking and produce more patents in high tech referred workers are substantially less likely to quit and earn slightly higher wages than nonreferred workers in call centers and trucking the two industries for which we can calculate worker level profits referred workers yield substantially higher profits per worker than nonreferred workers these profit differences are driven by lower turnover and lower recruiting costs for referrals jel codes j24 m51 j30 j63

intrinsic motivation in public service theory and evidence from state supreme courts abstractthis paper provides a theoretical and empirical analysis of the intrinsic preferences of state appellate court judges we construct a panel data set using published decisions from all state supreme courts from 1947 to 1994 we estimate the effects of changes in judges employment conditions on a number of measures of judicial performance the results are consistent with the hypothesis that judges are intrinsically motivated to provide high quality decisions and that at the margin they prefer quality over quantity when judges face less time pressure whether from the introduction of an intermediate appellate court the weakening of electoral demands or an increased salary they write more well researched opinions that are cited more often by other judges these effects are strongest when judges have more discretion to select their portfolios of cases

the motivation and bias of bureaucrats many individuals are motivated to exert effort because they care about their jobs rather than because there are monetary consequences to their actions the intrinsic motivation of bureaucrats is the focus of this paper and three primary results are shown first bureaucrats should be biased second sometimes this bias takes the form of advocating for their clients more than would their principal while in other cases they are more hostile to their interests for a range of bureaucracies those who are biased against clients lead to more efficient outcomes third self selection need not produce the desired bias instead selection to bureaucracies is likely to be bifurcated in the sense that it becomes composed of those who are most preferred by the principal and those who are least preferred

price or quantity in tacit collusion abstract we investigate the choice of market variable price or quantity of an optimal implicit cartel if the discount factor is high the cartel can realize the monopoly profit in both cases otherwise it is optimal for the cartel to rely on quantities in the collusive phase if goods are substitutes and prices if goods are complements the reason is that this minimizes the gains from deviations from collusive play

reducing bureaucratic corruption interdisciplinary perspectives on what works abstract this article offers the first comprehensive review of the interdisciplinary state of knowledge regarding anti corruption policies with a particular focus on reducing corruption among civil servants drawing on the work of economists political scientists sociologists and anthropologists we examine seven policy categories 1 rewards and penalties 2 monitoring 3 restructuring bureaucracies 4 screening and recruiting 5 anti corruption agencies 6 educational campaigns and 7 international agreements notably rigorous empirical evaluation is lacking for the majority of commonly prescribed anti corruption policies nevertheless we find growing evidence of the effectiveness of policies based on monitoring including anti corruption audits and e governance in addition adequate civil service wages seem to be a necessary but insufficient condition for control of corruption an emerging skepticism regarding the effectiveness of anti corruption agencies also is apparent in the literature we conclude with broader lessons drawn from our review such as the recognition that when corruption is a systemic problem it cannot be treated in the long term with individual level solutions

bureaucracy infrastructure and economic growth evidence from u s cities during the progressive era recent work in the sociology of economic development has emphasized the establishment of a professional bureaucracy in place of political appointees as an important component of the institutional environment in which private enterprise can flourish i hypothesize that establishment of such a bureaucracy will lengthen the period that public decision makers are willing to wait to realize the benefits of expenditures leading to allocation of a greater proportion of government resources to long gestation period projects such as infrastructure this hypothesis can be tested using data generated by a natural experiment in the early part of this century when a wave of municipal reform transformed the governments of many u s cities controlling for city and time effects adoption of civil service is found to increase the share of total municipal expenditure allocated to road and sewer investment other estimates imply that this increased share raises the growth rate of city manufacturing employment by one half percent per year this abstract was borrowed from another version of this item

representative trust and reciprocity prevalence and determinants this paper provides evidence about the determinants of trust and reciprocal inclinations that is a tendency for people to respond in kind to hostile or kind actions in a representative setting we investigate the prevalence of reciprocity in the population the correlation between trust and positive and negative reciprocal inclinations within person the individual determinants of reciprocity and the relationship with psychological measures of personality we find that most people state reciprocal inclinations in particular in terms of positive reciprocity as well as substantial heterogeneity in the degree of trust and reciprocity trust and positive reciprocity are only weakly correlated while trust and negative reciprocity exhibit a negative correlation in terms of determinants being female and increasing age are associated with stronger positive and weaker negative reciprocal tendencies taller people are more positively reciprocal but height has no impact on negative reciprocity psychological traits also affect trust and reciprocity jel d63 j3 j6

capture by threat we analyze a simple stochastic environment in which policy makers can be threatened by nasty interest groups in the absence of these groups the policy maker s desire for reelection guarantees that good policies are implemented for every realization of the shock when pressure groups can harass the policy maker good policies will be chosen for only a subset of states of nature hence honest and able leaders might implement bad policies and needed reforms could be delayed in order to make good policies more likely the public will want to increase the cost of exerting pressure for nasty groups and provide rents to those in power this last result can be used to explain the existence of political parties they play a role resembling that of the supervisor in the literature on collusion in hierarchical agency a rational public may also choose to ignore negative media reports on a politician s personal life and in general elect strong political leaders the prevalence of coercive methods of infl

management of bureaucrats and public service delivery evidence from the nigerian civil service we study how the management practices bureaucrats operate under relate to the quantity and quality of public services delivered we do so exploiting data from the nigerian civil service for 4700 public sector projects we have hand coded independent engineering assessments of project completion rates and delivered quality we supplement this with a survey eliciting management practices for bureaucrats in the 63 civil service organizations responsible for these projects building on bloom and van reenen 2007 management practices matter a one standard deviation increase in bureaucrat s autonomy signi cantly increases project completion rates by 18 a one standard deviation increase in practices related to incentives monitoring of bureaucrats signi cantly lowers project completion rates by 14 we show the negative impacts of incentive provision monitoring arise because bureaucrats multi task and incentives are poorly targeted and because these management practices capture elements of subjective performance evaluation that leave scope for dysfunctional responses from bureaucrats to support a causal interpretation of our ndings we document the determinants of management practices and examine channels through which organizations might endogenously adjust management practices our results provide novel insights into how changes in how bureaucrats are managed can have potentially large impacts on public service delivery in a developing country context jel classi cation j33 j38 o20

bureaucracy and growth a cross national analysis of the effects of weberian state structures on economic growth the role of bureaucratic authority structures in facilitating economic growth has been a sociological concern since max weber s classic contributions almost 100 years ago using a recent and original data set we examine the characteristics of core state economic agencies and the growth records of a sample of 35 developing countries for the 1970 1990 period our weberianness scale offers a simple measure of the degree to which these agencies employ meritocratic recruitment and offer predictable rewarding long term careers we find that these weberian characteristics significantly enhance prospects for economic growth even when we control for initial levels of gdp per capita and human capital our results imply that weberianness should be included as a factor in general models of economic growth they also suggest the need for more attention by policymakers to building better bureaucracies and more research by social scientists on variations in how state bureaucracies are organized

the role of career and wage incentives in labor productivity evidence from a two stage field experiment in malawi we study how career and wage incentives affect labor productivity through self selection and incentive effect channels using a two stage field experiment in malawi first recent secondary school g

plata o plomo bribe and punishment in a theory of political influence we present a model where groups attempt to influence policies using both bribes plata spanish for silver and the threat of punishment plomo spanish for lead we then use it to make predictions about the quality of a country s public officials and to understand the role of institutions granting politicians with immunity from legal prosecution the use of punishment lowers the returns from public office and reduces the incentives of high ability citizens to enter public life cheaper plomo and more resources subject to official discretion are associated with more frequent corruption and less able politicians this predicts that violence in a country will typically go together with corruption and worse politicians moreover the possibility of punishment changes the nature of the influence game so that even cheaper plata can lower the ability of public officials protecting officials from accusations of corruption immunity will decrease the frequency of corruption if the judiciary is weak and may increase the quality of politicians these predictions cannot emerge from a traditional model where only bribes are used the positive evils and dangers of the representative as of every other form of government may be reduced to two heads first general ignorance and incapacity or to speak more moderately insufficient mental qualifications in the controlling body secondly the danger of its being under the influence of interests not identical with the general welfare of the community

unobserved ability efficiency wages and interindustry wage differentials interindustry wage differentials in wage regressions estimated for individuals have been interpreted as evidence consistent with efficiency wage models a principal competing explanation is that these differentials are generated by differences across workers in unobserved ability this paper tests the unobserved ability hypothesis by incorporating test scores into standard wage regressions as error ridden indicators of unobserved ability the results indicate that differences in unobserved ability explain relatively little of interindustry or interoccupation wage differentials this abstract was borrowed from another version of this item

anonymity or distance job search and labour market exclusion in a growing african city we show that helping young job seekers signal their skills to employers generates large and persistent improvements in their labour market outcomes we do this by comparing an intervention that improves the ability to signal skills the job application workshop to a transport subsidy treatment designed to reduce the cost of job search in the short run both interventions have large positive effects on the probability of finding a formal job the workshop also increases the probability of having a stable job with an open ended contract four years later the workshop significantly increases earnings job satisfaction and employment duration but the effects of the transport subsidy have dissipated gains are concentrated on individuals who generally have worse labour market outcomes overall our findings highlight that young people possess valuable skills that are unobservable to employers making these skills observable generates earnings gains that are far greater than the cost of the intervention

politics and economics in weak and strong states abstract while much research in political economy points out the benefits of limited government political scientists have long emphasized the problems created in many less developed nations by weak states which lack the power to tax and regulate the economy and to withstand the political and social challenges from non state actors i construct a model in which the state apparatus is controlled by a self interested ruler who tries to divert resources for his own consumption but who can also invest in socially productive public goods both weak and strong states create distortions when the state is excessively strong the ruler imposes such high taxes that economic activity is stifled when the state is excessively weak the ruler anticipates that he will not be able to extract rents in the future and underinvests in public goods i show that the same conclusion applies in the analysis of both the economic power of the state i e its ability to raise taxes and its political power i e its ability to remain entrenched from the citizens i also discuss how under certain circumstances a different type of equilibrium which i refer to as consensually strong state equilibrium can emerge whereby the state is politically weak but is allowed to impose high taxes as long as a sufficient fraction of the proceeds are invested in public goods the consensually strong state might best correspond to the state in oecd countries where taxes are high despite significant control by the society over the government

the origins of state capacity property rights taxation and politics economists generally assume that the state has sufficient institutional capacity to support markets and levy taxes this paper develops a framework where policy choices in market regulation and taxation are constrained by past investments in legal and fiscal capacity it studies the economic and political determinants of such investments demonstrating that legal and fiscal capacity are typically complements the results show that among other things common interest public goods such as fighting external wars as well as political stability and inclusive political institutions are conducive to building state capacity some correlations in cross country data are consistent with the theory

the uncertainty effect when a risky prospect is valued less than its worst possible outcome expected utility theory prospect theory and most other models of risky choice are based on the fundamental premise that individuals choose among risky prospects by balancing the value of the possible consequences these models therefore require that the value of a risky prospect lie between the value of that prospect s highest and lowest outcome although this requirement seems essential for any theory of risky decision making we document a violation of this condition in which individuals value a risky prospect less than its worst possible realization this demonstration which we term the uncertainty effect draws from more than 1000 experimental participants and includes hypothetical and real pricing and choice tasks as well as field experiments in real markets with financial incentives our results suggest that there are choice situations in which decision makers discount lotteries for uncertainty in a manner that cannot be accommodated by standard models of risky choice from the time of bernoulli on it has been common to argue that a individuals tend to display aversion to the taking of risks and b that risk aversion in turn is an explanation for many observed phenomena in the economic world arrow 1971 p 90

training wages and sample selection estimating sharp bounds on treatment effects this paper empirically assesses the wage effects of the job corps program one of the largest federally funded job training programs in the u s even with the aid of a randomized experiment the impact of a training program on wages is difficult to study because of sample selection a pervasive problem in applied microeconometric research wage rates are only observed for those who are employed and employment status itself may be affected by the training program this paper develops an intuitive trimming procedure for bounding average treatment effects in the presence of sample selection in contrast to existing methods the procedure requires neither exclusion restrictions nor a bounded support for the outcome of interest identification results estimators and their asymptotic distribution are presented the bounds suggest that the program raised wages consistent with the notion that the job corps raises earnings by increasing human capital rather than solely through encouraging work the estimator is generally applicable to typical treatment evaluation problems in which there is nonrandom sample selection attrition copyright wiley blackwell

r d subsidies spillovers and privatization in mixed markets we examine the use of subsidies to research and development rd however it does not lead to the equalization of per firm output and therefore to an efficient distribution of production costs we also find that privatization of the public firm reduces r d activity and welfare in the duopoly market this result stands even when optimal r d subsidies are provided

job queues and wages this paper uses job applications data to investigate the relationship between job queues and wage differentials the main finding is that openings for jobs that pay the minimum wage attract more job applicants than jobs that pay either slightly more or slightly less than the minimum wage this spike in the job application rate distribution suggests that ex ante rents generated for employees by an above market level minimum wage are not completely dissipated by reductions in nonwage benefits in addition we find that highly unionized firms large firms and firms in high wage industries tend to receive relatively many job applicants for openings

public service motivation as an argument for government provision a public service motivation psm inclines employees to provide effort out of concern for the impact of that effort on a valued social service though deemed to be important in the literature on public administration this motivation has not been formally considered by economists when a psm exists this paper establishes conditions under which government bureaucracy can better obtain psm motivated effort from employees than a standard profit maximizing firm the model also provides an efficiency rationale for low powered incentives in both bureaucracies and other organizations producing social services 2000 elsevier science s a all rights reserved

persistent wage dispersion and involuntary unemployment it is costly for firms offers to workers to be turned down both because firms must make additional offers and making offers is costly and because capital is underused or unused provided that workers apply to at least two firms for jobs there will be wage dispersion in equilibrium and some workers will randomly fail to receive any wage offers firms in the same industry with access to the same technology may nevertheless choose different levels of capital intensity firms using capital intensive technologies will pay higher wages

a time to make laws and a time to fundraise on the relation between salaries and time use for state politicians we study the relationship between the level of compensation and time use for us state legislators using survey data on time use we show that higher salary is robustly associated with legislators spending more time on fundraising in contrast higher salary is also robustly associated with less time spent on legislative activities and has no clear relation to time spent on constituent services the fundraising results are particularly strong for legislators who do not intend to run for higher office our results are consistent with an interpretation that higher salary raises the value of office and politicians respond with more fundraising because increased fundraising raises the chance of getting re elected more than does increased legislative activity back of the envelope calculations suggest that a 30 000 increase in salary is associated with politicians annually devoting 13 more hours to fundraising and 18 fewer hours to legislative activity resume un temps pour faire les lois et un autre pour lever des fonds etude du rapport entre le salaire et l emploi du temps des legislateurs d etat dans cet article nous examinons le lien entre le niveau de remuneration et l emploi du temps des legislateurs d etat aux etats unis en nous appuyant sur plusieurs donnees d enquetes relatives a la gestion du temps nous montrons que plus leur salaire est eleve plus les legislateurs ont tendance a consacrer du temps a lever des fonds le temps devolu aux activites legislatives ayant quant a lui tendance a diminuer sans lien evident avec le temps passe en circonscription au service des citoyens les resultats relatifs aux levees de fonds sont particulierement forts des lors que les legislateurs ne briguent pas de plus hautes fonctions et sont conformes a l interpretation selon laquelle un salaire eleve accroit l interet pour une fonction et puisque l augmentation des activites de financement ne se traduit pas par davantage d activites legislatives mais par des chances de reelection accrues les politiciens multiplient les levees de fonds des calculs rapides et approximatifs suggerent qu une hausse du salaire des politiciens de 30 000 par an representerait 13 heures de collecte de fonds en plus mais 18 heures d activites legislatives en moins annuellement

monopsony power in the market for nurses estimates are presented of the inverse elasticity of supply of nursing services to the individual hospital a quantity which is a natural measure of employer market power the estimates corresponding to employment changes taking place over one year are quite high in the neighborhood of 0 79 and even for changes taking place over three years are substantial in the neighborhood of 0 26 the estimates do not significantly differ for hospitals in major metropolitan areas and do not depend very sensitively on the assumed form of the oligopsony equilibrium this abstract was borrowed from another version of this item

higher pay worse outcomes the impact of mayoral wages on local government quality in peru abstract in this paper i study how wages earned by local politicians affect local government quality to identify the effects i use caps imposed by the peruvian central government on mayoral wages as an excluded instrument the results show that mayoral wages do not improve government performance in particular there is a negative impact on public investment implementation and on performance goals set by the central government moreover there is no evidence of a positive effect on politician selection municipal bureaucratic capacity and political effort wages do strongly affect the local political landscape increasing political competition and reducing political support for the mayor these changes may help explain the drop in performance as local authorities may face more political obstacles when implementing their policy agenda overall the results show that higher politician wages need not improve local government quality

promotion incentives in the public sector evidence from chinese schools abstract we provide evidence that promotion incentives influence the effort of public employees by studying china s system of promotions for teachers predictions from a tournament model of promotion are tested using retrospective panel data on primary and middle school teachers consistent with theory high wage increases for promotion are associated with better performance teachers increase effort in years leading up to promotion eligibility and they reduce effort if they are repeatedly passed over for promotion evaluation scores are positively associated with teacher time use and with student test scores diminishing concerns that evaluations are manipulated

productivity crowding out in labor markets with motivated workers abstract when workers intrinsic motivation matters a wage increase has mixed consequences on applicants productivity and motivation as shown in public service healthcare education and politics in a simple theoretical framework where ability and motivation are workers private information we rationalize these differentiated responses and identify intuitive conditions for higher wages inducing self selection of more or less productive and motivated workers the selection patterns depend both on the statistical association between workers characteristics and on the difference between the incentivized returns to ability across sectors we emphasize a crowding out effect of wage on workers productivity that has not been analyzed in the theoretical literature before

the costs of patronage evidence from the british empire i combine newly digitized personnel and public finance data from the british colonial administration for the period 1854 1966 to study how patronage affects the promotion and incentives of governors governors are more likely to be promoted to higher salaried colonies when connected to their superior during the period of patronage once allocated they provide more tax exemptions raise less revenue and invest less the promotion and performance gaps disappear after the abolition of patronage appointments patronage therefore distorts the allocation of public sector positions and reduces the incentives of favored bureaucrats to perform

comparing bertrand and cournot in mixed markets abstract we revisit the classic comparison between bertrand and cournot outcomes in a mixed market with private and public firms the results are often strikingly different and opposite to the ones obtained from a similar comparison in the standard setting with all profit maximizing firms

who becomes a politician can a democracy attract competent leaders while attaining broad representation economicmodels suggest that free riding incentives and lower opportunity costs give the less competent a comparative

state capacity conflict and development the absence of state capacities to raise revenue and to support markets is a key factor in explaining the persistence of weak states this paper reports on an ongoing project to investigate the incentive to invest in such capacities the paper sets out a simple analytical structure in which state capacities are modeled as forward looking investments by government the approach highlights some determinants of state building including the risk of external or internal conflict the degree of political instability and dependence on natural resources throughout we link these state capacity investments to patterns of development and growth

wages and recruitment evidence from external wage changes in this article the author estimates the causal effect of the wage level on the recruitment rate in establishments during the 1990s the wage setting for certified teachers in norway was completely centralized with a state paid wage premium of about 10 at some schools with severe recruitment problems the empirical approach exploits within school variation in wage premium eligibility and that actual teacher supply is empirically observed at schools with excess demand for teachers in a difference in differences framework the wage premium increases the recruitment rate by 6 to 7 percentage points this finding is robust to model specification and indicates that the recruitment elasticity to the wage is equal to the separation elasticity in absolute terms the implied short run labor supply elasticity for individual establishments is about 1 4 it is also evidence of a diminishing return to scale in recruitment activity a central assumption in search theoretic models of imperfect competition in the la

signaling and screening of workers motivation abstract this paper develops a model in which workers are heterogeneous in their intrinsic motivation to work at a firm we characterise optimal incentive schemes and examine how the firm can attract and select highly motivated workers to fill a vacancy when workers motivation is private information while posting a higher wage increases the probability of filling the vacancy it decreases the expected average quality of job applicants because less motivated workers are induced to apply the optimal wage scheme entails a trade off between the probability of filling the vacancy the rents left to the worker and the expected worker s motivation

how does your kindergarten classroom affect your earnings evidence from project star in project star 11 571 students in tennessee and their teachers were randomly assigned to classrooms within their schools from kindergarten to third grade this article evaluates the long term impacts of star by linking the experimental data to administrative records we first demonstrate that kindergarten test scores are highly correlated with outcomes such as earnings at age 27 college attendance home ownership and retirement savings we then document four sets of experimental impacts first students in small classes are significantly more likely to attend college and exhibit improvements on other outcomes class size does not have a significant effect on earnings at age 27 but this effect is imprecisely estimated second students who had a more experienced teacher in kindergarten have higher earnings third an analysis of variance reveals significant classroom effects on earnings students who were randomly assigned to higher quality classrooms in grades k 3 as measured by classmates end of class test scores have higher earnings college attendance rates and other outcomes finally the effects of class quality fade out on test scores in later grades but gains in noncognitive measures persist

is there monopsony in the labor market evidence from a natural experiment recent theoretical and empirical advances have renewed interest in monopsonistic models of the labor market however there is little direct empirical support for these models we use an exogenous change in wages at department of veterans affairs va hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market we estimate that labor supply to individual hospitals is quite inelastic with short run elasticity around 0 1 we also find that non va hospitals responded to the va wage change by changing their own wages

central bank announcements big news for little people little is known on how and whether central bank announcements affect consumers beliefs about policy relevant economic figures this paper focuses on consumers perceptions and expectations of inflation and interest rates and confidence therein based on a sound identification running surveys shortly before and after communication events and relying on above 15 000 observations spanning over 12 fomc press conferences between december 2015 and june 2018 we document the impact of the central bank communication on the general public while announcement events have no measurable direct effect on average beliefs they make people more likely to receive news about the central bank s policy in general informed consumers tend to have lower perceptions and expectations higher confidence and at least for perceived inflation smaller errors

tax farming redux experimental evidence on performance pay for tax collectors performance pay for tax collectors has the potential to raise revenues but might come at a cost if it increases the bargaining power of tax collectors vis a vis taxpayers we report the first large scale field experiment on these issues where we experimentally allocated 482 property tax units in punjab pakistan into one of three performance pay schemes or a control after two years incentivized units had 9 4 log points higher revenue than controls which translates to a 46 higher growth rate the scheme that rewarded purely on revenue did best increasing revenue by 12 9 log points 64 higher growth rate with little penalty for customer satisfaction and assessment accuracy compared to the two other schemes that explicitly also rewarded these dimensions the revenue gains accrue from a small number of properties becoming taxed at their true value which is substantially more than they had been taxed at previously the majority of properties in incentivized areas in fact pay no more taxes but instead report higher bribes the results are consistent with a collusive setting in which performance pay increases collectors bargaining power over taxpayers who have to either pay higher bribes to avoid being reassessed or pay substantially higher taxes if collusion breaks down

price or quantity the strategic choice of subsidized firms in a mixed duopoly this paper investigates the endogenous choice of the strategic variable price or quantity taken in a mixed duopoly by a public and a private firm prior to market competition while matsumura and ogawa 2012 in a standard mixed duopoly find that price is the unique equilibrium we show that by introducing firm subsidization in the same setting quantity can constitute a dominant strategy equilibrium

oligopsony and monopsonistic competition in labor markets we argue that models of oligopsony or monopsonistic competition provide insights and explanation for many empirical phenomena in labor markets using a simple model with job differentiation and preference heterogeneity we illustrate how such models can be employed to explain the existence of wage dispersion the persistence of labor market discrimination market failures in the provision of training and the anomalous employment effects of minimum wages

strengthening state capabilities the role of financial incentives in the call to public service we study a recent recruitment drive for public sector positions in mexico different salaries were announced randomly across recruitment sites and job offers were subsequently randomized screening relied on exams designed to measure applicants intellectual ability personality and motivation this allows the first experimental estimates of i the role of financial incentives in attracting a larger and more qualified pool of applicants ii the elasticity of the labor supply facing the employer and iii the role of job attributes distance attractiveness of the municipal environment in helping fill vacancies as well as the role of wages in helping fill positions in less attractive municipalities a theoretical model guides each stage of the empirical inquiry we find that higher wages attract more able applicants as measured by their iq personality and proclivity towards public sector work i e we find no evidence of adverse selection effects on motivation higher wage offers also increased acceptance rates implying a labor supply elasticity of around 2 and some degree of monopsony power distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities

non monetary incentives in online experiments monetary incentives in online experiments are not always easy to implement yet online experiments are advantageous in terms of a natural decision making environment less stress on participants and a large number of the latter can we obtain plausible results from online experiments by using non monetary incentives like altruism and curiosity we investigate the role of non monetary incentives in a simple ellsberg type experiment which can be easily compared to similar lab experiments

state and development the need for a reappraisal of the current literature this essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state it refers to a broader range of development goals including the structural transformation of the economy and focuses on problems like the resolution of coordination failures and collective action problems the conflicting issues of commitment and accountability and the need for balancing the trade offs they generate some ingredients of state capacity and political coalition building usually missed in the literature the possible importance of rent sharing in a political equilibrium the advantages and problems of political centralization and decentralization and the multidimensionality of state functions that may not be addressed by markets or private firms

the glittering prizes career incentives and bureaucrat performance bureaucracies are configured differently to private sector and political organizations across a wide range of civil services entry is competitive promotion is constrained by seniority jobs are for life and retirement occurs at a fixed age this implies that older entering officers who are less likely to attain the glittering prize of reaching the top of the bureaucracy before they retire may be less motivated to exert effort using a nationwide stakeholder survey and rich administrative data on elite civil servants in india we provide evidence that i officers who cannot reach the senior most positions before they retire are perceived to be less effective and are more likely to be suspended and ii this effect is weakened by a reform that extends the retirement age together these results suggest that the career incentive of reaching the top of a public organization is a powerful determinant of bureaucrat performance

the effect of adolescent experience on labor market outcomes the case of height taller workers receive a wage premium net of differences in family background the disparity is similar in magnitude to the race and gender gaps we exploit variation in an individual s height over time to explore how height affects wages controlling for teen height essentially eliminates the effect of adult height on wages for white men the teen height premium is not explained by differences in resources or endowments the teen height premium is partially mediated through participation in high school sports and clubs we estimate the monetary benefits of a medical treatment for children that increases height

merit tenure and bureaucratic behavior evidence from a conjoint experiment in the dominican republic bureaucratic behavior in developing countries remains poorly understood why do some public servants yet not others work hard to deliver public services misuse state resources and or participate in electoral mobilization a classic answer comes from weber bureaucratic structures shift behavior toward integrity neutrality and commitment to public service our study conducts the first survey experimental test of the effects of bureaucratic structures it does so through a conjoint experiment with public servants in the dominican republic looking at merit examinations and job stability we find that weber was right but only partially recruitment by examination curbs corruption and political services by bureaucrats while enhancing work motivation job stability by contrast only decreases political services tenured bureaucrats are less likely to participate in electoral mobilization examinations thus enhance the quality of bureaucracy motivation and lower corruption and democracy electoral compe

losing prosociality in the quest for talent sorting selection and productivity in the delivery of public services we embed a field experiment in a nationwide recruitment drive for nurses in zambia to test whether career benefits attract talent at the expense of prosocial motivation we randomize the offer of career benefits at the recruitment stage in line with common wisdom treatment attracts less prosocial applicants however the trade off only exists at low levels of talent the marginal applicants in treatment are more talented and equally pro social these are hired and they perform better at every step of the chain they deliver more services promote institutional childbirth and reduce child malnutrition by 25 in the communities they serve

double for nothing experimental evidence on an unconditional teacher salary increase in indonesia how does a large unconditional increase in salary affect the performance of incumbent employees in the public sector this paper presents experimental evidence on this question in the context of a policy change in indonesia that led to a permanent doubling of teachers base salaries the analysis uses a large scale randomized experiment across a representative sample of indonesian schools that accelerated this pay increase for teachers in treated schools the findings show that the large pay increase significantly improved teachers satisfaction with their income reduced the incidence of teachers holding outside jobs and reduced self reported financial stress nevertheless after two and three years the increase in pay led to no improvement in student learning outcomes the effects are precisely estimated making it possible to rule out even modest positive impacts on test scores the results suggest that unconditional pay increases are unlikely to be an effective policy option for improving the effort and productivity of incumbent employees in public sector settings

monetary incentives versus class credit evidence from a large classroom trust experiment this paper reports an experimental investigation of a trust game using either cash or class credit as incentives to participants we recruit from two auditorium classes in one class each token has cash value in the other each token is worth extra credit points added to the students overall average at the end of the semester the results indicate that using extra credit points to motivate participants generates qualitatively similar data on average as participants incentivized with cash we do find a difference in behavior with second movers who expect a low grade but those incentivized with class credit are closer to the game theoretic prediction

do institutions affect citizens selection into politics traditional political economy has paid primary attention to the structuring of the principal agent relationship between citizens and politicians and the role of competition and institutions in disciplining political agents however as the electoral control of politicians and the credibility of policy commitments are limited this perspective needs to be complemented with an economics of political selection that takes into account the quality of those elected to political office we review the emerging literature which investigates institutional conditions that impact the selection of politicians we discuss pay in politics electoral rules institutions enhancing transparency in politics and institutions which govern dual office holding in different branches of government we argue that further comparative analyses are essential in order to gain an improved understanding of the impact that institutions have on political outcomes not only via the channel of accountability but also via the channel of selection

mixed oligopoly privatization and subsidization abstract this paper demonstrates three effects of domestic production subsidies in a mixed oligopoly industry regarding privatization and efficiency first if subsidies are used before and after privatization welfare is unchanged by privatization second if subsidies are used only before privatization then privatization always lowers welfare regardless of the number of private firms in the industry third the subsidy contributes to overall efficiency in a mixed oligopoly due to cost distribution effects

incentives for subjects in internet experiments abstract providing incentives to subjects in internet experiments can be tricky one simple method is a high score as in computer games we test whether high scores provide adequate incentives in comparison to the usual performance based incentives we find significant differences

more cops less crime abstract i exploit a natural experiment to estimate the causal effect of police on crime the american recovery and reinvestment act increased funding for the community oriented policing services cops hiring grant program from less than 20 million over 2005 2008 to 1 billion in 2009 hiring grants distributed in 2009 were allocated according to an application score cutoff rule and i leverage quasi random variation in grant receipt by comparing the change over time in police and crimes for cities above and below the threshold in a difference in differences framework relative to low scoring cities those above the cutoff experience increases in police of about 3 2 and declines in victimization cost weighted crime of about 3 5 following the distribution of hiring grants the effects are driven by large and statistically significant effects of police on robbery larceny and auto theft with suggestive evidence that police reduce murders as well crime reductions associated with additional police were more pronounced in areas most affected by the great recession the results highlight that fiscal support to local governments for crime prevention may offer large returns especially during bad macroeconomic times

governance and the effectiveness of public health subsidies evidence from ghana kenya and uganda abstract distributing subsidized health products through existing health infrastructure could substantially and cost effectively improve health in sub saharan africa there is however widespread concern that poor governance in particular limited health worker accountability seriously undermines the effectiveness of subsidy programs we audit targeted bed net distribution programs to quantify the extent of agency problems we find that around 80 of the eligible receive the subsidy as intended and up to 15 of subsidies are leaked to ineligible people supplementing the program with simple financial or monitoring incentives for health workers does not improve performance further and is thus not cost effective in this context

monopsony power in migrant labor markets evidence from the united arab emirates by exploiting a reform in the united arab emirates that relaxed restrictions on employer transitions we provide new estimates of the monopsony power of firms over migrant workers our results show that the reform increased incumbent migrants earnings and firm retention this occurs despite an increase in employer transitions and is driven by a fall in country exits while the outcomes of incumbents improved the reform decreased demand for new migrants and lowered their earnings these results are consistent with a model of monopsony in which firms face upward sloping labor supply curves for both new recruits in source countries and incumbent migrants

electoral rules and political selection theory and evidence from a field experiment in afghanistan voters commonly face a choice between competent candidates and those with policy preferences similar to their own this article explores how electoral rules such as district magnitude mediate this trade off and affect the composition of representative bodies and the quality of policy outcomes we show formally that anticipation of bargaining over policy causes voters in elections with multiple single member districts to prefer candidates with polarized policy positions over more competent candidates results from a unique field experiment in afghanistan are consistent with these predictions specifically representatives selected by elections with a single multi member district are better educated and exhibit less extreme policy preferences

teacher mobility responses to wage changes evidence from a quasi natural experiment low mobility responses to wage changes imply rents associated with existing employment relationships for example continued employment after a wage cut all else equal reflects rents in the hand of the worker at the outset and symmetrically voluntary quits after a

distribution channel strategies in a mixed market abstract this paper studies equilibrium channel strategies in a mixed market with a public firm and a private firm the public firm is concerned with social welfare while the private firm aims to maximize its own profit each firm decides whether to adopt an integrated or a decentralized channel we examine two standard market competition modes bertrand and cournot within each competition mode we consider two typical vertical contracts wholesale price and two part tariff contracts our results suggest that equilibrium channel structures depend on the market competition mode the vertical contract form and the level of product substitutability specifically the channel strategy of the private firm depends mainly on the vertical contract form under a two part tariff contract the private firm always chooses decentralization under a wholesale price contract the private firm chooses integration for most scenarios except for highly substitutable products under bertrand competition i e under very intense competition the channel strategy of the public firm depends mainly on the competition mode under bertrand competition the public firm always chooses decentralization under cournot competition the public firm always chooses the opposite of the private firm s strategy