Somani, Ravi; (2019) Essays on Labour Economics in Developing Countries and the Role of the Public Sector. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This thesis presents a study of the internal functions of public-sector organisations in developing countries and how public-sector hiring policies interact with the wider economy, using Ethiopia as a case study. The first chapter introduces the thesis. The second chapter provides empirical evidence on how public-sector hiring policies impact education choices and private-sector productivity. I study the expansion of universities in Ethiopia and find that it leads to an increase in public-sector productivity but a decrease in private-sector productivity. The findings are rationalised by the following labour-market conditions, consistent with most developing country contexts: (i) entry into public employment is favoured towards those with a tertiary education; (ii) the public sector provides a large wage premium; (iii) entry into public employment requires costly search effort. The third chapter uses novel survey instruments and administrative data to mea- sure the individual-level information that bureaucrats have on local conditions and a field experiment to provide exogenous variation in information access. Civil servants make large errors and information acquisition is consistent with classical theoretical predictions. Bureaucrats have better information when: there are low costs of acquiring information; they are delegated authority over decision-making; there are organisational incentives to use operating information. The fourth chapter analyses the introduction of a management-information system, which provides civil servants better access to information on their local environment, in the education sector. I find that the intervention significantly improves certain service delivery outcomes (enrolment), while other outcomes (schooling conditions) significantly worsen, consistent with the existence of multitasking in the bureaucracy. The fifth chapter studies performance evaluations in the civil service. I use the dual-evaluation system in the Ethiopian civil service to measure supervisor bias and analyse its effects on service delivery, showing that supervisor bias is associated with efficiency losses in the public sector. The final chapter concludes.

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