Public Sector Motivation and Development Failures

22 Pages Posted: 20 Aug 2005

See all articles by Rocco Macchiavello

Rocco Macchiavello

University of Oxford - Nuffield Department of Medicine; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: August 2004


This paper provides a theoretical analysis of the relationship between public sector motivation and development. We analyze a simple two sectors model: a public and a private sector in which the returns are increasing in the quality of the public good produced by the public sector.

The main implication is that it is not necessarily a good thing to have cheap labor to hire in the public sector. Cheap labor makes more difficult to screen honest individuals. A relatively high level of social capital in the form of individuals animated by public service motivation is not sufficient to establish a well functioning public sector. The literature recognizes that a good public service can be obtained only with sufficient pecuniary incentives or personnel motivation.

While empirical evidence exists casting some doubt on the first view, this paper shows that the latter one may not be sufficient.

Keywords: Public Sector Motivation, Developing Countries, Corruption, Multiple Equilibria

JEL Classification: D73, H10, O11, P49

Suggested Citation

Macchiavello, Rocco, Public Sector Motivation and Development Failures (August 2004). Available at SSRN: or

Rocco Macchiavello (Contact Author)

University of Oxford - Nuffield Department of Medicine ( email )

New Road
Oxford, OX1 1NF
United Kingdom

Centre for Economic Policy Research (CEPR)

United Kingdom

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