Cyclical and Welfare Effects of Public Sector Unions in a Real-Business-Cycle Model

Motivated by the highly-unionized public sectors, the high public shares in total employment, and the public sector wage premia observed in Europe, this paper examines the importance of public sector unions for macroeconomic theory. The model generates cyclical behavior in hours and wages that is consistent with data behavior in an economy with highly-unionized public sector, namely Germany during the period 1970-2007. The union model is a signifi cant improvement over a model with exogenous public employment. In addition, endogenously-determined public wage and hours add to the distortionary e ffect of contractionary tax reforms by generating greater tax rate changes, thus producing signi ficantly higher welfare losses.

Data Envelopment Analysis (DEA) : A pedagogical guide for decision makers in the public sector

This guide introduces Data Envelopment Analysis (DEA), a performance measurement technique, in such a way as to be appropriate to decision makers with little or no background in economics and operational research. The use of mathematics is kept to a minimum. This guide therefore adopts a strong practical approach in order to allow decision makers to conduct their own efficiency analysis and to easily interpret results. DEA helps decision makers for the following reasons: - By calculating an efficiency score, it indicates if a firm is efficient or has capacity for improvement. - By setting target values for input and output, it calculates how much input must be decreased or output increased in order to become efficient. - By identifying the nature of returns to scale, it indicates if a firm has to decrease or increase its scale (or size) in order to minimize the average cost. - By identifying a set of benchmarks, it specifies which other firms' processes need to be analysed in order to improve its own practices.

Cronyism in Business, Public Sector and Politics

This paper contrasts the incentives for cronyism in business, the public sector and politics within an agency problem model with moral hazard. The analysis is focused on the institutional differences between private, public and political organizations. In business, when facing a residual claimant contract, a chief manager ends up with a relatively moderate …rst-best level of cronyism within a …firm. The institutional framework of the public sector does not allow explicit contracting, which leads to a more severe cronyism problem within public organizations. Finally, it is shown that the nature of political appointments (such that the subordinate's reappointment is conditioned on the chief's re-election) together with implicit contracting makes political cronyism the most extreme case. JEL classifi…cation: D72, D73, D86. Keywords: Cronyism; Meritocracy; Manager; Bureaucrat; Politician.

Public sector rationing and private sector selection [paper accepted and forthcoming in Journal of Public Economic Theory]

We study the interaction between nonprice public rationing and prices in the private market. Under a limited budget, the public supplier uses a rationing policy. A private firm may supply the good to those consumers who are rationed by the public system. Consumers have different amounts of wealth, and costs of providing the good to them vary. We consider two regimes. First, the public supplier observes consumers' wealth information; second, the public supplier observes both wealth and cost information. The public supplier chooses a rationing policy, and, simultaneously, the private firm, observing only cost but not wealth information, chooses a pricing policy. In the first regime, there is a continuum of equilibria. The Pareto dominant equilibrium is a means-test equilibrium: poor consumers are supplied while rich consumers are rationed. Prices in the private market increase with the budget. In the second regime, there is a unique equilibrium. This exhibits a cost-effectiveness rationing rule; consumers are supplied if and only if their costbenefit ratios are low. Prices in the private market do not change with the budget. Equilibrium consumer utility is higher in the cost-effectiveness equilibrium than the means-test equilibrium [Authors]

Motivating Employees of the Public Sector: Does Public Service Motivation Matter?

This article analyzes if, and to what extent, the public service motivation (PSM) construct has an added value to explain work motivation in the public sector. In order to address the specificity of PSM when studying work motivation, the theoretical model underlying this empirical study compares PSM with two other explanatory factors: material incentives, such as performance-related pay, and team relations and support, such as recognition by superiors. This theoretical model is then tested with data collected in a national survey of 3,754 civil servants at the Swiss municipal level. Results of a structural equations model clearly show the relevance of PSM. They also provide evidence for the importance of socio-relational motivating factors, whereas material incentives play an anecdotal role.

Cost system design and cost management in the Spanish public sector

Cost systems have been shown to have developed considerably in recent years andactivity-based costing (ABC) has been shown to be a contribution to cost management,particularly in service businesses. The public sector is composed to a very great extentof service functions, yet considerably less has been reported of the use of ABC tosupport cost management in this sector.In Spain, cost systems are essential for city councils as they are obliged to calculate thecost of the services subject to taxation (eg. waste collection, etc). City councils musthave a cost system in place to calculate the cost of services, as they are legally requirednot to profit , from these services.This paper examines the development of systems to support cost management in theSpanish Public Sector. Through semi-structured interviews with 28 subjects within oneCity Council it contains a case study of cost management. The paper contains extractsfrom interviews and a number of factors are identified which contribute to thesuccessful development of the cost management system.Following the case study a number of other City Councils were identified where activity-based techniques had either failed or stalled. Based on the factors identified inthe single case study a further enquiry is reported. The paper includes a summary usingstatistical analysis which draws attention to change management, funding and politicalincentives as factors which had an influence on system success or failure.

Location models in the public sector

The past four decades have witnessed an explosive growth in the field of networkbased facilitylocation modeling. This is not at all surprising since location policy is one of the mostprofitable areas of applied systems analysis in regional science and ample theoretical andapplied challenges are offered. Location-allocation models seek the location of facilitiesand/or services (e.g., schools, hospitals, and warehouses) so as to optimize one or severalobjectives generally related to the efficiency of the system or to the allocation of resources.This paper concerns the location of facilities or services in discrete space or networks, thatare related to the public sector, such as emergency services (ambulances, fire stations, andpolice units), school systems and postal facilities. The paper is structured as follows: first,we will focus on public facility location models that use some type of coverage criterion,with special emphasis in emergency services. The second section will examine models based onthe P-Median problem and some of the issues faced by planners when implementing thisformulation in real world locational decisions. Finally, the last section will examine newtrends in public sector facility location modeling.

Statewide Economic Impacts of Disaster-Related Payments to Support Household and Private and Public Sector Recovery in Iowa, January 2010

There have been a multitude of programs providing assistance to the state of Iowa in the past 18 months. Springtime 2008 disasters resulted in tornado damage and widespread flood damage to large fractions of the state. In consequence, there was a very large flow of federal and state resources dedicated to assisting community and statewide recovery efforts. The nation was in recession as well and continued to be in recession through much of 2009. A sizeable amount of assistance found its way to Iowa under the American Recovery and Reinvestment Act of 2009 in the forms of infrastructure stimulus spending, income supports and other safety net spending for households, and stabilization assistance for essential public services like education. On top of that, the state of Iowa authorized the I Jobs program as an additional infrastructure development program, and as a jobs stimulus program. The total amount of spending for all types of programs, disaster or economic recovery related, is perhaps as high as $7.5 billion over the next few years.

HRM Practices, Intrinsic Motivators, and Organizational Performance in the Public Sector

This article aims to determine the impact of human resource management (HRM) practices on public service motivation (PSM) and organizational performance. Based on a survey of Swiss cantonal public employees (N = 3,131), this study shows that several HRM practices may be considered as organizational antecedents of PSM and strong predictors of perceived organizational performance. Fairness, job enrichment, individual appraisal, and professional development are HRM practices that are positively and significantly associated with PSM and perceived organizational performance. Moreover, these results suggest that HRM practices are stronger predictors than either PSM or organizational commitment when explaining the individual perception of organizational performance.

Recruiting and Retaining Women and Minorities in Public Sector Engineering Positions, HR-348, 1995

The objective of phase one of this research was to assess the degree to which currently employed Iowa Department of Transportation (DOT) employees would be affected by a more aggressive policy to recruit and retain women and minority engineers. The DOT's "Future Agenda" was used as a baseline to focus on efforts to update and implement a recruitment plan that would target underrepresented classes. The primary question that emerged out of phase one was how could the Iowa DOT strengthen its ties with Iowa State University (ISU) to produce increased numbers of in-state applicants for engineering positions. This introduced the objective of phase two, which was to identify problem areas resulting in unacceptably high attrition rates for women, minorities, and to a lesser degree, Caucasian men in the College of Engineering at ISU, particularly Civil and Construction Engineering (CCE). Past research has focused on (1) projected shortages of qualified civil engineers, (2) the obstacles confronting women in a traditionally male-oriented profession, and (3) minorities who are often unprepared to succeed in the rigors of an engineering curriculum because of a lack of academic preparedness. The researchers in this study, in contrast, chose to emphasize institutional reasons why women, minorities, and some Caucasian men often feel a sense of isolation in the engineering program. It was found that one of the key obstacles to student retention is the lack of visibility of the civil engineering profession. The visibility problem led to the hypothesis that many engineering students do not have a clear conception of what the practice of civil engineering entails. It was found that this may be a better predictor of attrition than the stereotypical assumption that a majority of students leave their engineering programs because they are not academically able to compete. Recommendations are offered to strengthen the ties between ISU's Department of CCE and the Iowa DOT in order to counter the visibility issue. It was concluded that this is a vital step because over the next 5-15 years 40% of DOT engineers currently employed will be phasing into retirement. If the DOT expects to draw sufficient numbers of engineers from within the state of Iowa and if increasing numbers of them are to be women and minorities, a university connection will help to produce the qualified applicants to fulfill this need.