Bad Politicians, Good Bureaucrats: Modelling Public Sector Corruption and Bureaucratic Reliability
42 Pages Posted: 22 Mar 2021
Date Written: March 17, 2021
Most models of bureaucracy tend to assume a principal-agent model in which elected politicians delegate policy implementation to bureaucrats. It is generally theorized that shifts from the citizens’ ideal points happen at the agent (i.e. the bureaucrat) level, but recent studies in developing economies show that this might not always be the case. This paper adds an additional perspective to existing accountability models by relaxing the assumption that all principals are principled.
The proposed model combines theories of executive influence and pro-social motivation into a formal mechanism that explains how the different social welfare outcomes arise from the decisions of political principals and bureaucratic agents. Defining bureaucratic reliability as the choice to improve social welfare by selecting an efficient firm in a procurement environment, I show that the nature of the principal determines the existence of a high, intermediate or low reliability equilibrium. The main findings are that the corruption of the political principals may induce a situation in which the bureaucracy is trapped in a low reliability equilibrium, that dishonest principals are associated with fewer public-minded individuals in the bureaucracy, and that the corruption of the political regime and the level of economic development may also affect bureaucratic recruitment.
Keywords: Political institutions, corruption, bureaucracy and politics
JEL Classification: D73, K42, H11
Suggested Citation: Suggested Citation