Bureaucratic Rents and Life Satisfaction

IZA Discussion Paper No. 1964

IEW Working Paper No. 269

68 Pages Posted: 8 Feb 2006

See all articles by Simon Luechinger

Simon Luechinger

University of Lucerne

Stephan Meier

Federal Reserve Bank of Boston; IZA Institute of Labor Economics; Columbia Business School - Management

Alois Stutzer

University of Basel - Faculty of Business and Economics; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: February 2006

Abstract

The monopoly position of the public bureaucracy in providing public services allows government employees to acquire rents. Those rents can involve higher wages, monetary and non-monetary fringe benefits (e.g., pensions and staffing), and/or bribes. We propose a direct measure to capture the total of these rents: the difference in reported subjective well-being between bureaucrats and people working in the private sector. In a sample of 38 countries, we find large variations in the extent of rents in the public bureaucracy. The extent of rents is determined by differences in institutional constraints and correlates with perceptions of corruption. We find judicial independence to be of major relevance for a tame bureaucracy.

Keywords: public sector, rents, life satisfaction, corruption, judicial independence

JEL Classification: D72, D73, I31, J30, J45, K42, H11, H83

Suggested Citation

Luechinger, Simon and Meier, Stephan and Stutzer, Alois, Bureaucratic Rents and Life Satisfaction (February 2006). IZA Discussion Paper No. 1964; IEW Working Paper No. 269. Available at SSRN: https://ssrn.com/abstract=880353

Simon Luechinger

University of Lucerne ( email )

Frohburgstrasse 3
P.O. Box 4466
Lucerne, 6002
Switzerland

Stephan Meier

Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Columbia Business School - Management ( email )

3022 Broadway
New York, NY 10027
United States

Alois Stutzer (Contact Author)

University of Basel - Faculty of Business and Economics ( email )

Peter Merian-Weg 6
4002 Basel
Switzerland
0041 61 267 3361 (Phone)
0041 61 267 3340 (Fax)

HOME PAGE: http://www.wwz.unibas.ch/stutzer/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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