Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18862
Authors: 
Delfgaauw, Josse
Dur, Robert
Year of Publication: 
2004
Series/Report no.: 
CESifo working papers 1223
Abstract: 
Civil servants have a bad reputation of being lazy. However, citizens' personal experiences with civil servants appear to be significantly better. We develop a model of an economy in which workers differ in laziness and in public service motivation, and characterise optimal incentive contracts for public sector workers under different informational assumptions. When civil servants' effort is unverifiable, lazy workers find working in the public sector highly attractive and may crowd out workers with a public service motivation. When effort is verifiable, the government optimally attracts motivated workers as well as the economy's laziest workers by offering separating contracts, which are both distorted. Even though contract distortions reduce aggregate welfare, a majority of society may be better off as public goods come at a lower cost.
Subjects: 
public sector labour markets
incentive contracts
work ethics
public service motivation
JEL: 
J3
H1
L3
J4
M5
Document Type: 
Working Paper

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