Time consistency and bureaucratic budget competition

Kai Konrad and Sebastian Kessing

Munich Reprints in Economics from University of Munich, Department of Economics

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 labour, 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. © 2008 The Author(s). Journal compilation Royal Economic Society 2008.

Keywords: bureaucracy; decision making; employment; public sector; resource allocation (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (5)

Published in Economic Journal 525 118(2008): pp. 1-15

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Related works:
Journal Article: Time Consistency and Bureaucratic Budget Competition (2008)
Working Paper: Time Consistency and Bureaucratic Budget Competition (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:22090

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