The quality of public management is a recurrent concern in many countries. Calls to attract the economy's best and brightest managers to the public sector abound. This paper studies self-selection into managerial and non-managerial positions in the public and private sector, using a model of a perfectly competitive economy where people differ in managerial ability and in public service motivation. We find that, if demand for public sector output is not too high, the equilibrium return to managerial ability is always highest in the private sector. As a result, relatively many of the more able managers self-select into the private sector. Since this outcome is efficient, our analysis implies that attracting a more able managerial workforce to the public sector by increasing remuneration to private-sector levels is not cost-efficient.

Additional Metadata
Keywords managerial ability, public management, public service motivation, self-selection
JEL Public Administration; Public Sector Accounting and Audits (jel H83), Human Capital; Skills; Occupational Choice; Labor Productivity (jel J24), Wages, Compensation, and Labor Costs (jel J3), Public Sector Labor Markets (jel J45)
Publisher Tinbergen Institute
Persistent URL hdl.handle.net/1765/14050
Series Tinbergen Institute Discussion Paper Series
Journal Discussion paper / Tinbergen Institute
Citation
Delfgaauw, J, & Dur, A.J. (2008). Managerial Talent, Motivation, and Self-Selection into Public Management (No. TI 2008-097/1). Discussion paper / Tinbergen Institute. Tinbergen Institute. Retrieved from http://hdl.handle.net/1765/14050