Measuring differences in public service motivation between the public and private sector Paul A. Grout 17 th November 2006 Centre for Market and Public Organisation

2 Two connected pieces of ongoing research on donated labour/public service motivation (both joint work) Quick summary of theoretical model of not- for-profit in a bureaucratic environment Evidence on donated labour from British Household Panel Survey

3 Not-for-profit in a bureaucratic environment

4 Donated labour: Private sector difficult to supply donated labour because of residual claimant expropriates the effect of donated labour Not-for-profit is able to provide an environment that favours donated labour because of the non-distribution constraint. Public sector? – bureaucratic environment

5 Three organisation stories Uni. Dept. NGO Marketised example

6 Parties Worker - paid w - chooses e: donated labour (non-contractible) - cares about output Outside agent - makes contribution of q to organisation Third party distant outsider

7 Output and pay-offs Output/quality: v(e,(1-t)q,w) Worker welfare: v(e,(1-t)q) – c(e) + w c(e) - convex c(0) = 0

8 Outside agent v(e,(1-t)y,w) – k(q) k(q) - convex k(0) = 0 [Third party v(e,(1-t)y,w) – k T (q)]

9 Time line Worker offered wage Worker makes e Outside agent offers of q Managers accepts or rejects If reject wait for non-stochastic arrival of q m

10 Single outside agent Suppose single outside agent - then their contribution is q s :

outcome with single outside party S

12 Introduce third party Introduce third party - their contribution would be q m :

outcome with third party T

14 Elasticity condition for all e

15 Proposition If the elasticity condition holds, then there is a unique θ, θ*, such that (i) (ii)

17 BHPS evidence

18 Years , 11 waves Caring sectors defined as working in Education, Health or Social Services. 42,831 observations Logit analysis of whether doing any unpaid overtime Controlling for gender, age, marital status, children, education, wage, normal working hours, part-time, occupation, union or staff association at workplace, tenure, firm size, region & time indicators Career concern: we further control for whether the worker has opportunities for promotion.

19 pricarepubcarenfpcarenoncare Total Number of observations ,929 41,831 % % overtime % paid overtime % unpaid overtime % paid overtime, o> % unpaid overtime, o> % both, o>

20 Pooled LogitFixed Effects Logit CoeffStd errCoeffStd err N= N= Noncare Pricare---- Pubcare Nfpcare Wage Prom opp Tenure Union Parttime Kids School No qual Male

21 Pooled TobitFE Tobit (add means) CoeffStd errCoeffStd err Noncare Pricare---- Pubcare Nfpcare Wage Prom opp Tenure Union Parttime Kids School No qual Male

22 Preliminary Conclusions Empirical evidence supports basic the theoretical literature that donated labour is sensitive to organisational/ownership. Suggests not-for-profit may have a role to play in public service delivery However, bureaucratic structure may make donated labour delicate in this environment.