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Title:Time consistency and bureaucratic budget competition PDF Logo
Authors:Kessing, Sebastian G.
Konrad, Kai A.
Issue Date:2006
Series/Report no.:CESifo working paper 1791
Abstract:High employment protection in the public sector results in strategic over-employment if government divisions compete for budgets in a dynamic setting. Bureaucrats who are interested in maximising their divisions’ output employ excess labor, since this induces the sponsor to provide complementary inputs in the future. Restrictions on hiring decisions in the public sector can be regarded as provisions to reduce strategic hiring. We also provide evidence from a survey of decision makers in a public sector bureaucracy with very high employment protection. The results confirm that decision makers are aware of the strategic effects of their hiring decisions on budget allocation.
JEL:H11
H61
H83
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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