Dynamic reform of public institutions: A model of motivated agents and collective reputation
State capacity is optimized when public institutions are staffed by individuals with public-service motivation. However, when motivated agents value the collective reputation of their place of employment, steady-state equilibria with both high and low aggregate motivation (reputation) in the mission...
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Published in | Journal of public economics Vol. 168; pp. 94 - 108 |
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Main Author | |
Format | Journal Article |
Language | English |
Published |
Elsevier B.V
01.12.2018
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Subjects | |
Online Access | Get full text |
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Summary: | State capacity is optimized when public institutions are staffed by individuals with public-service motivation. However, when motivated agents value the collective reputation of their place of employment, steady-state equilibria with both high and low aggregate motivation (reputation) in the mission-oriented sector exist. Reforming a low-motivation institution requires a non-monotonic wage path: since the effect of higher wages on motivation is negative for a high-reputation institution, but positive for a low-reputation institution, a transition to a high-reputation steady state requires an initial wage increase to crowd motivated workers in, followed by a wage decrease to crowd non-motivated workers out.
•We study a model of endogenous worker selection in the public sector.•We consider motivated agents that value the collective reputation of their place of employment.•Steady-state equilibria with both high and low aggregate motivation (reputation) in the mission-oriented sector exist.•A transition to the optimal equilibrium is requires a non-monotonic wage path. |
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ISSN: | 0047-2727 1879-2316 |
DOI: | 10.1016/j.jpubeco.2018.10.005 |