Loyalty and competence in public agencies

Competent public agencies are associated with better economic outcomes. Beyond competence, political leaders need to secure the loyalty of their agencies. Unfortunately, several theories predict a tradeoff between these two valued features. This paper finds that recruitment into agencies is meritocratic where (1) agency officials have poor outside options, (2) careers in agencies are long-lasting, and (3) agency loyalty is important. Moreover, agency competence is lower when (4) loyalty is important but the time horizon is short, and (5) outside opportunities improve but the time horizon is long. This evidence fits best with a theory of loyalty as non-contractible behavior.     

Bargaining in legislatures over private and public goods with endogenous recognition

Public Choice - This paper studies a sequential model of multilateral bargaining under majority rule in which legislators make decisions in both private and public good dimensions via an endogenous...     

Voting on public spending: Differences between public employees,transfer recipients,and private workers

Politicians who support higher public spending in the hope of gaining the support of transfer recipients, such as the aged, the unemployed, and those on welfare, have no reason to believe that the strategy will succeed; according to the evidence reviewed here, transfer recipients do not vote much differently on such issues from other voters. State and local employees have shown a clear preference for higher public spending, but their numbers are limited and the relative strength of their preference weak, so that their impact on voting outcomes has been only marginal.     

The provision of public services by government funded decentralized agencies

Public services are often provided by lower level agencies that are funded by higher level government. Since markets for such services do not exist, normal pressures to minimize costs do not operate; indeed, usually these costs are unobservable. We study a principal-agent model which emphasizes the distinction between the financing and provision of public services. Two broad situations are analyzed: (i) the agencies are induced to reveal true costs; and (ii) in addition, to minimize costs, agencies must be induced to exert effort. The characteristics of the optimal funding contract and the marginal cost of public funds are derived in each case.     

Teacher recruitment and retention in public and private schools

Private school salaries are substantially below those in public school systems. Nonetheless, private school heads are as satisfied as public school principals with the quality of their new teachers and substantially more satisfied with their experienced instructors. This difference remains after controlling for school and community characteristics and for the principal's tenure and educational priorities. In addition, appraisals of experienced and new teachers suggest that private schools are more successful in retaining the best of their new teachers and in developing the teaching skills of their faculties. Apparent reasons include greater flexibility in structuring pay, more supervision and mentoring of new teachers, and freedom to dismiss teachers for poor performance. These findings suggest that improvement in the quality of public school performance will require the use of accountability tools such as pay-for-performance and dismissal.     

The relationships between public and private pension schemes: an introductory overview

Only recently have social insurance and private pensions, collectively, come to be thought of in terms of a total social security benefit package. The economic problems brought on by the 1974 oil crisis initially triggered consideration of a common, integrated role for the two systems. The second oil crisis reinforced the relative expansion in private pension programs, as a supplement to social security. Before these events, private and public pension programs interacted in only a limited number of ways, confined to relatively few countries. These interactions were largely confined to collective bargaining, whereby private pensions were gradually extended to nearly all employees in France and Sweden; mandating, or legally requiring private supplementation of social security, debated in several countries in the early 1970's, but postponed by the 1974 oil crisis; and contracting out, or covering a part of the social security benefit under a private plan, as in the United Kingdom. Overall, the tradition of private pensions was not very strong or broadbased. The current debate centers on which public/private pension mix is desirable from the point of view of an old-age income-maintenance program. A new element is the rising support for a "third pillar"--individual tax-encouraged savings--not only as a supplement, but as an alternative to social insurance.     

Market forces and private sector processes in government policy: The job training partnership act

This article examines those provisions of the Job Training Partnership Act designed to introduce the presumed efficiency of marketlike forces and incentives into federal employment and training programs. First, the JTPA replaced the administrative system used in earlier training programs (which emphasized detailed federal control and monitoring of the programs at the local level) with a system that, in effect, set a price for a prescribed level of performance and reduced oversight of the training process. Second, the Act gave people in private business some control over programs at the local level. According to available data, JTPA program performance is no different in local areas with a strong private-sector involvement than in areas where that involvement is weak and passive. The performance standards have had an effect, although the relationship between the standards and the goals of the JTPA is ambiguous at best. The article outlines the limitations of a market-oriented system for the administration of public policy.     

Peer effects in private and public schools across countries

Many argue that the composition of a school or classroom‐that is, the characteristics of the students themselves‐affect the educational attainment of an individual student. This influence of the students in a classroom is often referred to as a peer effect. There have been few systematic studies that empirically examine the peer effect in the educational process. In this research, we examine the peer effect with a unique data set that includes individual student achievement scores and comprehensive characteristics of the students' families, teachers, other school characteristics, and peers for five countries. The data allow an examination of peer effects in both private and public schools in all countries. Our analysis indicates that peer effects are a significant determinant of educational achievement; the effects of peers appear to be greater for low‐ability students than for high‐ability students. The finding is robust across countries but not robust across school type. © 2000 by the Association for Public Policy Analysis and Management.     

Deteriorating public and private sector relations in Central America

The Central American countries are divided by profound political differences. Yet surprising similarities exist in the changing relations between the public and private sectors. Throughout the region, public and private sectors lock into a vicious circle. The inability of the state to provide order and social harmony creates disincentives for the private sector to invest or even to continue existing levels of production. The government responds by increasing its responsibilities at the expense of the private sector. In doing so it assumes risks the private sector refuses, but further alienates the private sector nonetheless.     

Philanthropy and the housing crisis: The dilemmas of private charity and public policy

Abstract

American philanthropy has historically sought to address the nation's housing crisis, especially among the poor. This article compares private philanthropy's response to the housing crisis in two important eras of economic transformation: the period between the Civil War and World War I (the Progressive Era), when the United States was undergoing large‐scale urbanization and industrialization, and the period from the 1980s through today, when the United States became integrated in a global economy and confronted the shock of deindustrialization, widening economic disparities, and deepening urban decay.

Following the historical review, the article focuses briefly on the current housing crisis and the dilemmas that private foundations and nonprofit organizations face in trying to develop a coherent strategy to address the problem. It closes with a proposal for a partnership between private foundations and housing organizations that can address the need to change both public opinion and public policy toward housing.     

Majority rule and the public provision of a private good

This paper extends the literature on the socialization of commodities by developing a model of voting over the public provision of a private good: health care. The private use of health care is modeled as a supplement rather than as an exclusive alternative to public health care. A majority rule equilibrium is shown to exist. The equilibrium characterization is an example of Director's Law of Income Redistribution. A ban on private health care activities is shown to be opposed by a majority of voters. Implications for the size and distribution of private health care expenditures are drawn.     

Attracting private investment to contaminated properties: The value of public interventions

We employ a mail survey of private developers that uses conjoint choice experiments and Likert‐scaled attitudinal questions to examine preferences for policy instruments and incentives intended to encourage brownfield cleanup and redevelopment. Our analysis suggests that developers judge public hearing requirements at brownfield redevelopments unattractive, but that they place a relatively high value on liability relief—from both cleanup costs and claims by third parties. Reimbursement of environmental assessment costs is not particularly attractive. We also find considerable heterogeneity among developers in the value they place on these incentives, depending on their experience with contaminated sites. © 2006 by the Association for Public Policy Analysis and Management