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Are bureaucrats paid like CEOs? Performance compensation and turnover of top civil servants

Benny Geys, Tom-Reiel Heggedal () and Rune J. Sørensen

Journal of Public Economics, 2017, vol. 152, issue C, 47-54

Abstract: Recent research explores the effect of financial and career incentives on public-sector hiring processes and subsequent performance. The reverse relation between performance and bureaucrats' compensation and turnover has received only limited attention. Due to the distinct features of public-sector organizations, bureaucrats are traditionally argued to require either permanent positions and fixed wages, or low-powered performance incentives. This article studies how the performance of top civil servants in Norwegian local governments affects their compensation and turnover. We thereby build on a unique new dataset over the period 1991–2014. Our results indicate that better performing top civil servants obtain a higher compensation and are less likely to be replaced. Nonetheless, these incentives remain low-powered in line with agency theory prescriptions.

Keywords: Bureaucracy; Performance pay; Public administration; Executive compensation; Norway (search for similar items in EconPapers)
JEL-codes: D73 H11 H70 L30 (search for similar items in EconPapers)
Date: 2017
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