Are Bureaucrats Efficient? An Application to the Provision of AFDC

• Published in: Public choice Vol. 86; no. 1/2; pp. 157 - 174
• Main Author: Hassapis, Christis
• Format: Journal Article
• Language: English
• Published: Leiden Kluwer Academic Publishers 01.01.1996; Springer; Springer Nature B.V
• Subjects: Aid to Families with Dependent Children (AFDC); Average cost; Bureaucracy; Bureaucrats; Bürokratietheorie; Child care; Coefficients; Corporate sponsorship; Cost efficiency; Cost estimates; Cost estimation models; Cost functions; Costs; Economic efficiency; Efficiency; Effizienz; Government bureaucracy; Hypotheses; Marginal costs; Minimization of cost; Monopolies; Private schools; Public assistance programs; Public good; Public goods; Public services; Shadow prices; State government; Theorie; Utility functions
• ISSN: 0048-5829; 1573-7101
• DOI: 10.1007/BF00114880

The question on how bureaucrats behave in the provision of a public service has been the subject of a considerable amount of research, most of which has been largely theoretical and inconclusive, especially on the issue of efficiency. This paper builds a bureaucratic theoretical model and provides empirical evidence by examining the workings of a government bureau, supplying a public service, namely Aid to Families with Dependent Children (AFDC), at the state level. It builds and estimates a generalized short run cost function that allows for systematic relative price inefficiency and does not require cost minimization subject to market prices as a maintained hypothesis. The model tests cost minimization as a testable special case. The estimating procedure allows us to test for a number of other features of the technology that are of interest such as productivity growth, marginal costs, returns to scale, technical change, and factor demands.