Managerial talent,motivation, and self-selection into public management

The quality of public management is a recurrent concern in many countries. Calls to attract the economy's best and brightest managers to the public sector abound. This paper studies self-selection into managerial positions in the public and private sector, using a model of a perfectly competitive economy where people differ in managerial ability and in public service motivation. We find that, if demand for public sector output is not too high, the equilibrium return to managerial ability is always higher in the private sector. As a result, relatively many of the more able managers self-select into the private sector. Since this outcome is efficient, our analysis implies that attracting a more able managerial workforce to the public sector by increasing remuneration to private-sector levels is not cost-efficient.     

Enkele vraagstukken van economischen groei in Nederland

Voordracht gehouden op 23 Februari 1956 in de Economische Sectie van het Studentencongres der Nederlanden te Gent.     

Task‐Specific Human Capital and Organizational Inertia

Employees' incentive to invest in their task proficiency depends on the likelihood that they will execute the same tasks in the future. Changes in tasks can be warranted as a result of technological progress and changes in firm strategy as well as from fine‐tuning job design and from monitoring individuals' performance. However, the possibility of a change in tasks reduces employees' incentive to invest in task‐specific skills. We develop a simple two‐period principal–agent model showing that some degree of inertia benefits the principal. We then analyze how organizations can optimally combine several policies to approach the optimal degree of inertia. In particular, we consider the optimal mixture of (abstaining from) exploration, managerial vision, organizational task‐specific investments, and incentive pay. Our analysis yields testable predictions concerning the relations between these organizational policies.     

Where to go? Workers' reasons to quit and intra- vs. interindustry job mobility

We show that workers' reasons for quitting their job affect their decision to stay in or leave their industry, using survey data among public sector employees in the Netherlands. Workers quitting for e.g. pay, work pressure, or job duties move relatively often to another industry, in contrast to workers quitting for commuting time or the atmosphere at work. This suggests that workers use their experience in the initial job to update their expectations on other jobs in the industry, as the first set of job aspects is more likely to be related among jobs within an industry than the latter. Furthermore, it is shown that workers' reasons to quit fully explain the differences in wage growth between intra- and interindustry job movers. Lastly, we find that workers who quit for pay or management often leave the public sector altogether.