Bureaucratic Behavior in the Local Public Sector: A Revealed Preference Approach

Public sector bureaucratic utility is typically assumed to be a function ofbudget size or government employment. Although intuitively appealing, thereare no definitive direct tests of the assumption. To fill this gap, thispaper exploits data that isolate resource allocation decisions made by localpublic sector bureaucrats. We use revealed preference theory to find thatthe bureaucracy behaves ``as if'' bureaucratic utility is an increasingfunction of employment across government functions and public spending,providing direct evidence justifying the popular assumption in theoreticalmodels of government behavior.