Work Motivation and Incentives in the Public Sector

The public sector makes up for an important part of our economy. According to estimates by the OECD (2008) a large share of the labor force in OECD countries is employed by the public sector. These public sector workers provide a wide range of goods and services to the public. Examples of services that are publicly provided range from education, health care, transport, garbage collection, to public safety. This large variety in public services suggests that all people, at some point in their lifetime, will either have to deal with or rely on public service. The performance of public sector organizations, therefore, receives considerable attention from the public. Even more so, because public services are paid for by taxes. People expect good services and value for tax money.

The delivery of public goods and services is highly labor intensive. Key to good public services are the e¤orts and output of public sector workers. However, incentivizing public sector workers to work hard may prove costly and di¢ cult. Performance in the public sector is often hard to measure and verify. This is also reflected in the way performance is assessed in the public sector. Performance assessment in the public sector is relatively rare and, if present, often tied to weak incentives (see Burgess and Metcalfe 1999). As a result, public sector performance relies to a great extent on the intrinsic motivations of the workers employed by the public sector. Learning about the motivations of public sector workers may therefore contribute to our understanding of performance in the public sector.

This thesis contributes to the growing literature on motivations of workers in the public sector. The first part of this thesis empirically studies differences in motivations between public sector and private sector workers. In particular, we study two closely related topics. We investigate how a worker's altruism and valuation of the mission of the public sector jointly aspect the likelihood of public sector employment. Moreover, we examine whether public sector workers rate themselves as more altruistic and lazy as compared to private sector workers. Next, chapter 4 studies the motivations of government workers in particular. It empirically investigates whether government workers are more satisfied with their job when their own mission preferences align with the mission preferences of the politicians in office. In the last part of this thesis we take a somewhat different approach. We investigate one possible way to motivate public sector workers. We conducted a field experiment at a large Dutch school for intermediate vocational education to study whether the provision of performance feedback to teachers can improve the performance of teachers. The remainder of this introduction proceeds as follows. The next section discusses intrinsic motivation and its consequences for the public sector. Section 1.2 provides a general discussion on feedback and, in particular, the role of feedback as an incentive. Finally, section 1.3 provides a short overview of the chapters in this thesis.