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.     

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.     

Coexistence of public and private job agencies: Screening with heterogeneous institutions

In response to the analysis of bureaucracies and the finding of inherent inefficiencies, public choice theory argues for an increase in competition by contracting out government services and deregulation. The paper explores the effect of coexisting public and private employment services in a model with private information of the worker about her ability and unobservable effort choice. The employer's use of an efficient unemployment exchange and an efficient private agency may lead to optimal screening with first best contracts. This is due to the assumption that good types of workers lose more human capital than bad types in periods of unemployment or mismatch. In contrast to standard screening contracts, a bad type of worker earns an information rent if the employment exchange is inefficient, but the employer chooses not to use the private agency for good types.     

Interrelationships among public spending preferences: A micro analysis

This paper examines a system of qualitative demand equations for public spending on education, welfare, housing, health, highways, and defense. The demand for public spending for a particular category is hypothesized to be a function of income, tax-price, private benefit measures, and tastes as well as demands for other public expenditure categories. Based on individual survey data, the conditional maximum likelihood estimates of the logit equations are obtained. The results indicate the significant role of tastes, private benefit variables, and tax-prices. In addition, positive rather than negative, demand interrelationships are found to exist. These findings question the validity of the median voter hypothesis as a model for public budget allocation.     

Independent and competing agencies: An effective way to control government

Controlling government is a primary focus of the politico-economic literature. Recently, various political institutions have been analyzed from this perspective, most importantly balanced budget rules, fiscal federalism, and direct democracy. However, one type of institution has been neglected so far: elected competitors to the government. Such institutional competition between the government and an independent agency can be found at the Swiss local level, where finance Commissions compete with the government. In some parts of Switzerland, local finance commissions can ex ante criticize government projects and bring alternative policy proposals onto the political agenda, which are then voted on by the citizens. Thus, they become strong competitors to the government. We econometrically investigate this institutional setting by comparing the 26 Swiss cantons. We find the power of the local finance commission to have an economically relevant, statistically significant and robust negative effect on the tax burden and on public expenditures.     

Can public policy deter smoking escalation among young adults?

In the wake of significant budget shortfalls, 37 states and the District of Columbia have recently increased cigarette excise taxes to boost revenues. This study examines the impact of increasing the price of cigarettes, which will occur as a consequence of cigarette excise tax increases, and implementing restrictions on smoking in private worksites, restaurants, government worksites, healthcare facilities, and other public places on young adult smoking progression. This paper employs nationally representative longitudinal data on young adults from the Monitoring the Future Surveys matched with information on site-specific prices and smokefree air laws. The estimates clearly indicate that increasing the price of cigarettes would substantially decrease the number of young adults who progress into higher intensities of smoking. In addition, private worksite restrictions and restrictions on smoking in other public places are found to decrease moderate smoking uptake among young adults.     

Factors underlying migration and refugee issues: Responses and cooperation among OECD member states

Human migration over thousands of years has come to be accepted as a natural phenomenon. With the emergence 300 years ago and subsequent legitimization of state sovereignty, controls over the movement and entry of persons into virtually all states have become increasingly prevalent. As the twentieth century concludes, international migratory pressures are more intense than in any previous era. What distinguishes this period from earlier ones is that the supply of willing receiving destinations for would‐be migrants has fallen far behind the demand.

This article sets out to examine the more significant root causes behind international migration, to identify the reasons explaining the rapid rise of migration issues on the agendas of OECD governments, to discuss the varied responses to these pressures from these same governments, and to speculate about how the global migration phenomenon will continue to evolve and what stance will be adopted by concerned governments in both sending and probable and actual receiving states.     

Mapping EU agencies as political entrepreneurs

The European Union relies on decentralised agencies to implement important transnational regulations, such as certifying the safety of medicines. However, the authority of these agencies does not have ‘hard’ legal status and crucially depends on disseminating ideas and information effectively: what can be termed ‘political entrepreneurship’. This article provides the first comprehensive analysis of the political entrepreneurship of EU agencies by constructing a conceptual typology of entrepreneurial strategies. Drawing conceptually on transnational public administration, a new database is constructed of the ‘entrepreneurship’ of 33 EU agencies in 2014 based on their media communication activities, face‐to‐face networking in workshops and collaborations, and knowledge dissemination and ‘learning’ exercises. This is mapped against the political salience of agencies in the European Parliament and media. The mapping exercise shows four types of entrepreneurial strategies covering the population of EU agencies: technical functional, insulating, network‐seeking and politicised. The typology is validated through semi‐structured interviews in 11 EU agencies, showing the core characteristics of each type of strategy. The article concludes by arguing that this typology provides an important addition to existing categories of EU agencies based on autonomy and accountability, and advocates a future research strategy examining the interaction between agencies’ entrepreneurial strategies and the expectations and reactions of stakeholder audiences.     

Budget-maximizing governmental agencies: An empirical test

Niskanen's theory of government budgeting, involving powerful agencies interested in maximizing their budgets through bargaining with a weak, poorly informed governmental ‘Sponsor’, has received wide recognition. This paper presents the first direct empirical tests of Niskanen's ideas. One implication of Niskanen's model of budgeting is that the demand for public services will appear to be elastic. Niskanen's model also implies restrictions on the elasticity of the derived demand for labor in the public sector. Neither set of predictions is supported by existing empirical research on government activity.     

Favoritism and cooperation

Public Choice - In a series of laboratory experiments, two types of players were created randomly. Participants of one type were selected for a group based on performance on a task, whereas...