Governance, bureaucratic rents, and well-being differentials across US states

Simon Luechinger, Mark Schelker and Alois Stutzer

Oxford Economic Papers, 2014, vol. 66, issue 2, 443-464

Abstract: We analyse the influence of institutional restrictions on bureaucratic rents. As a measure for these rents, we propose subjective well-being differentials between workers in the public administration and workers in other industries. Based on data for the US states, we estimate the extent to which institutional efforts to strengthen bureaucratic accountability affect differences in well-being. We find that well-being differences are smaller in states with high transparency, elected auditors, and legal deficit carryover restrictions. These findings are consistent with limited rent extraction under these institutional conditions. No or weak effects are found for performance audits and regulatory review.

Date: 2014
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