Public service motivation and performance: a critical perspective

Purpose – A growing body of literature points to the importance of public service motivation (PSM) for the performance of public organizations. The purpose of this paper is to assess the method predominantly used for studying this linkage by comparing the findings it yields without and with a correction suggested by Brewer (2006), which removes the common-method bias arising from employee-specific response tendencies. Design/methodology/approach – First, the authors conduct a systematic review of published empirical research on the effects of PSM on performance and show that all studies found have been conducted at the individual level. Performance indicators in all but three studies were obtained by surveying the same employees who were also asked about their PSM. Second, the authors conduct an empirical analysis. Using survey data from 240 organizational units within the Swiss federal government, the paper compares results from an individual-level analysis (comparable to existing research) to two analyses where the data are aggregated to the organizational level, one without and one with the correction for common-method bias suggested by Brewer (2006). Findings – Looking at the Attraction to Policy-Making dimension of PSM, there is an interesting contrast: While this variable is positively correlated with performance in both the individual-level analysis and the aggregated data analysis without the correction for common-method bias, it is not statistically associated with performance in the aggregated data analysis with the correction. Originality/value – The analysis is the first to assess the robustness of the performance-PSM linkage to a correction for common-method bias. The findings place the validity of at least one part of the individual-level linkage between PSM and performance into question.

Fiscal Federalism and Tax Equalization: The potential for progressive local taxes

We construct an empirically informed computational model of fiscal federalism, testing whether horizontal or vertical equalization can solve the fiscal externality problem in an environment in which heterogeneous agents can move and vote. The model expands on the literature by considering the case of progressive local taxation. Although the consequences of progressive taxation under fiscal federalism are well understood, they have not been studied in a context with tax equalization, despite widespread implementation. The model also expands on the literature by comparing the standard median voter model with a realistic alternative voting mechanism. We find that fiscal federalism with progressive taxation naturally leads to segregation as well as inefficient and inequitable public goods provision while the alternative voting mechanism generates more efficient, though less equitable, public goods provision. Equalization policy, under both types of voting, is largely undermined by micro-actors' choices. For this reason, the model also does not find the anticipated effects of vertical equalization discouraging public goods spending among wealthy jurisdictions and horizontal encouraging it among poor jurisdictions. Finally, we identify two optimal scenarios, superior to both complete centralization and complete devolution. These scenarios are not only Pareto optimal, but also conform to a Rawlsian view of justice, offering the best possible outcome for the worst-off. Despite offering the best possible outcomes, both scenarios still entail significant economic segregation and inequitable public goods provision. Under the optimal scenarios agents shift the bulk of revenue collection to the federal government, with few jurisdictions maintaining a small local tax.