Resumen de Time consistency and bureaucratic budget competition

Sebastian G. Kessing, Kai A. Konrad

• We provide a new explanation for higher labor intensity in the public sector based on the theory of bureaucracy. Tenure in the public sector results in strategic over-employment if government divisions compete for budgets intertemporally. Bureaucrats who are interested in maximising their divisions� output employ excess labor, since this induces the sponsor to provide complementary inputs in the future.

  The resulting inefficiency in the expenditure structure is more severe in periods in which large future budget increases are unlikely and reveals a possible efficiency cost of stagnation.