Dynamic reform of public institutions: A model of motivated agents and collective reputation
Justin Valasek ()
Discussion Papers, Research Unit: Economics of Change from WZB Berlin Social Science Center
State capacity is optimized when public institutions are staffed by individuals with public-service motivation. However, when motivated agents value the collective reputation of their place of employment, steady-state equilibria with both high and low aggregate motivation (reputation) in the mission-oriented sector exist. Reforming a low-motivation institution requires a non-monotonic wage path: since the effect of higher wages on motivation is negative for a highreputation institution, but positive for a low-reputation institution, a transition to a high-reputation steady state requires an initial wage increase to crowd motivated workers in, followed by a wage decrease to crowd non-motivated workers out.
Keywords: Motivated Agents; Institutional Reform; Public Sector (search for similar items in EconPapers)
JEL-codes: D23 D73 L32 (search for similar items in EconPapers)
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Journal Article: Dynamic reform of public institutions: A model of motivated agents and collective reputation (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbeoc:spii2015303r
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