TY - JOUR AU - Finan, Frederico AU - Olken, Benjamin A AU - Pande, Rohini TI - The Personnel Economics of the State JF - National Bureau of Economic Research Working Paper Series VL - No. 21825 PY - 2015 Y2 - December 2015 DO - 10.3386/w21825 UR - http://www.nber.org/papers/w21825 L1 - http://www.nber.org/papers/w21825.pdf N1 - Author contact info: Frederico Finan Department of Economics University of California 508-1 Evans Hall #3880 Berkeley, CA 94720-3880 Tel: 310/794-5958 Fax: 310/825-9528 E-Mail: ffinan@econ.berkeley.edu Benjamin A. Olken Department of Economics, E52-542 MIT 77 Massachusetts Avenue Cambridge, MA 02139 Tel: 617/588-1437 Fax: 617/868-2742 E-Mail: bolken@mit.edu Rohini Pande Yale University Department of Economics 27 Hillhouse Avenue New Haven, CT 06520 Tel: 617-384-5267 Fax: 617-496-8753 E-Mail: rohini.pande@yale.edu AB - Governments play a central role in facilitating economic development. Yet while economists have long emphasized the importance of government quality, historically they have paid less attention to the internal workings of the state and the individuals who provide the public services. This paper reviews a nascent but growing body of field experiments that explores the personnel economics of the state. To place the experimental findings in context, we begin by documenting some stylized facts about how public sector employment differs from that in the private sector. In particular, we show that in most countries throughout the world, public sector employees enjoy a significant wage premium over their private sector counterparts. Moreover, this wage gap is largest among low-income countries, which tends to be precisely where governance issues are most severe. These differences in pay, together with significant information asymmetries within government organizations in low-income countries, provide a prima facie rationale for the emphasis of the recent field experiments on three aspects of the state–employee relationship: selection, incentive structures, and monitoring. We review the findings on all three dimensions and then conclude this survey with directions for future research. ER -