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Equilibrium Administrations (joint with Michael Ting and Gergely Ujhely)

Microeconomics Seminar 2019-2020
joint with the Département de sciences économiques, Université de Montréal

room C-6149 (U. de Montréal, Pavillon Lionel-Groulx, 3150, rue Jean-Brillant)

Organizer : Deniz Dizdar (U. of Montreal)



We develop a simple model of public administrations motivated by two distinguishing features of careers in government. First, bureaucrats often have their own views about what their employer, the government, should be doing. Second, when choosing to work for the government, bureaucrats realize that the policies they will be asked to implement are subject to change depending on which political party is in power. We study the entry of bureaucrats into the public sector, and show how the bureaucracy’s composition and performance depends on expected levels of political competitiveness and polarization, as well as on the private-public wage gap. We then describe how parties’ policy choices, which respond to the composition of the bureaucracy, resolve an ideology-output tradeoff. Finally, we propose the notion of an equilibrium administration, which ties together bureaucrats’ entry decisions, parties’ policy choices and citizens’ preferences over governments.  Our results highlight that even under civil service systems, political polarization can result in features commonly associated with patronage: increased partisanship and a lack of bureaucratic neutrality, higher pay and reduced quality of public services, fluctuations in the type and quantity of government output associated with electoral cycles. Rather than being due to changes in institutions, here these features emerge as the endogenous response by the government workforce to polarized politics.

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