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Time Consistency and Bureaucratic Budget Competition

Sebastian Kessing and Kai Konrad

No 1791, CESifo Working Paper Series from CESifo

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.

Keywords: bureaucratic competition; time consistency; labor intensity; public sector (search for similar items in EconPapers)
JEL-codes: H11 H61 H83 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-cdm and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Time Consistency and Bureaucratic Budget Competition (2008)
Journal Article: Time Consistency and Bureaucratic Budget Competition (2008) Downloads
Working Paper: Time consistency and bureaucratic budget competition (2008)
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