This paper develops and tests two efficiency wage models of corruption in the civil service. Under fair wage models, civil service wages are an important determinant of corruption. Under shirking models, the level of wages is of secondary importance, as potential bribes dwarf wage income. The empirical evidence points to a negative relationship between corruption and wages across developing countries. Tests as to the validity of the two different efficiency wage models are inconclusive.
corruption will be different depending on which efficiency wage hypothesis applies. The amount of corruption can be checked with that predicted by the two efficiencywagemodels to assess which model best describes the data. In a low–bribe environment, on the other hand, civil servants who follow the fair wage–corruption hypothesis will be as corrupt as their maximizing counterparts, as long as civil service wages are relatively low.
Corruption in public procurement and tax administration are more likely to be characterized by large bribe size, suggesting that these are
The aim of the paper is to shift the focus of famine analysis away from food supply towards the macroeconomic determinants of food entitlement—i.e., to the ability of individuals to purchase food. Towards this end, we develop a model to demonstrate how loose monetary and fiscal policies may give rise to famine even when there is no change in per capita food output. We illustrate our findings with a description of the 1974 Bangladesh famine.
We study the determinants of employment and wages in the public sector, using a new set of panel data for 34 LDCs and 21 OECD countries from 1972–992, by estimating equations suggested by an efficiency wage model. We find that government employment is positively associated with the relaxation of resource constraints (the revenue-to-GDP ratio and foreign financing in the case of developing countries and GDP per capita in the case of OECD countries), urbanization, the level of education, and certain countercyclical pressures for government hiring (the real effective exchange rate for developing countries and private employment for OECD countries). Certain measures of government wages are positively associated with government revenues and negatively associated with the level of education, government debt, and countercyclical pressures.
The main focus of the “wage bargaining” literature has been on the factors promoting real wage flexibility at the macro level. This paper, in contrast, examines the microeconomic issues of wage bargaining. More specifically, this paper appraises the following questions: (a) what are the conditions under which a firm prefers decentralized to centralized bargaining?, (b) what are the characteristic features of firms which prefer decentralized to centralized bargaining?, and (c) has the proportion of firms which prefer decentralized bargaining increased over time? These questions are examined in an efficiency wage model with insider-outsider features. This paper provides useful theoretical insights for understanding the issues involved in shifting from centralized to decentralized wage bargaining.
In this paper, we study the determinants of employment and wages in the public sector, using a new set of panel data for 34 LDCs and 21 OECD countries from 1972-1992. The estimated equations are based on an efficiencywagemodel for the public sector and include proxy variables for financial constraints and unemployment. The paper compares and contrasts the results in the LDCs with those for the OECD countries.
Employment and wage policy in the public sector has attracted considerable attention in the policy literature. A recent series of