Are bureaucrats paid like CEOs? Performance compensation and turnover of top civil servants
Journal article, Peer reviewed
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- Scientific articles 
Original versionJournal of Public Economics, 152(2017), 47-54 https://doi.org/10.1016/j.jpubeco.2017.05.006
Recent research explores the effect of financial and career incentives on public-sector hiring processes and subsequent performance. The reverse relation between performance and bureaucrats' compensation and turnover has received only limited attention. Due to the distinct features of public-sector organizations, bureaucrats are traditionally argued to require either permanent positions and fixed wages, or low-powered performance incentives. This article studies how the performance of top civil servants in Norwegian local governments affects their compensation and turnover. We thereby build on a unique new dataset over the period 1991–2014. Our results indicate that better performing top civil servants obtain a higher compensation and are less likely to be replaced. Nonetheless, these incentives remain low-powered in line with agency theory prescriptions..
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