Can a Higher Wage Attract Better Quality Applicants without Deteriorating Public Service Motivation? Evidence from the Bangladesh Civil Service

ABSTRACT

Although the civil service plays a critical role in economic development, it performs poorly in many countries, partly due to civil servants’ low salaries. Therefore, in 2015, the Bangladesh government doubled the salary of civil servants. However, the reform may worsen public service delivery by attracting those who have lower public service motivation (PSM). Using the data of applicants to the Bangladesh civil service (BCS), this study examines the effect of the 2015 pay-scale reform on PSM. Taking a difference-in-difference approach, this study finds that the BCS officers hired after the reform are both academically smarter and more motivated to public service than those hired before the reform. Our results suggest that salary increases can be an effective for recruiting higher-quality officers.

KEYWORDS:

• Public service motivation
• pro-social behavior
• civil service
• wage
• salaries
• applicants
• pay-scale reform
• Bangladesh

Acknowledgments

We appreciate Antony Mbithi and participants of Canadian Economic Association Conference, 2019 for comments and suggestions for this paper.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1. Empirical studies examining the effect of financial incentive on performance in public-sector jobs are limited to frontline service providers such as school teachers (De Ree et al., 2018; Duflo, Hanna, & Ryan, 2012) and community health providers (Ashraf, Bandiera, & Lee, 2016; Banerjee, Glennerster, & Duflo, 2008).

2. In a closely related study, Ashraf et al. (2018) find that, in the recruitment of community health workers in Zambia, career incentives to ascend the civil-service career ladder to better-paid positions help the public sector to attract candidates with higher PSM.

3. Using a laboratory experiment on Indian college students, Hanna and Wang (2017) find that those who cheat on a dice task and those with lower pro-social preferences are more likely to prefer entering government service after graduation, regardless of cognitive ability.

4. Just before the pay-scale reform, the average monthly wage was 17,969 BDT ($ 225) in the private sector and 22,040 BDT ($ 276) in the public sector. The wage differential between public and private wage increased from 10.6% in 2013 to 22.7% in 2015 (Rahman & Al-Hasan, 2018).

5. There are empirical studies examining the performance of civil service officers in developing countries. Bertrand et al. (2018) find that the Indian Administrative service (IAS) officers entering the civil service at a later age have lower promotion prospects, which results in lower performance as measured by stakeholders’ evaluation and suspension records. Rasul and Rogger (2018), examining the Nigerian civil service, show that offices’ use of more management practices on performance incentives is negatively correlated with the performance measure of the development projects’ completion rate.

6. BPSC members chair the viva board, which consists of a psychologist from a recognized university and higher government officials from a ministry nominated by the Ministry of Public Administration (Khan, 2015). The viva board members assess the candidates based on their intellectuality, emotional stability, smartness, leadership attributes, and involvement in other activities, such as sports, debate competitions, and hobbies. In 2013, the number of applicants for the BCS exam was 221,575, of which 9,515 passed the written exam and 2,175 were selected for appointment. In 2015, 244,107 people applied for the BCS exam; 6,088 of them passed the written exam and 2,158 were selected for appointment (BPSC, 2015).

7. The news of the 2015 pay-scale reform was published in August 2014 (Daily Nation, 2014). There was an analysis of the pay scales by the leading think tank of Bangladesh on September 8, 2014 (Centre for Policy Dialogue, 2015).

8. In the BCS (Administration cadre), the number of officers recruited is 290, 279, and 280 in 2012, 2013, and 2015, respectively (BPSC, 2015). Only BCS (administration cadre) officers are selected as our sample. This is because there are few officers recruited for other cadre services in 2012, 2013, and 2015.

9. Based on the number of districts within the division, 2 to 5 district offices from each division were randomly selected.

10. In Bangladesh, there are a few coaching centers that offer intensive programs for the preparation of BCS exam. Generally, after graduation, a good number of applicants take the BCS examination after preparation via a coaching center. The coaching centers are few, and mostly located in Dhaka. Anyone can enroll in the coaching centers by paying around $125. The course duration is 1-6 months (most commonly 3 months) for preliminary, written, and viva voce examinations.

11. See appendix for how the Big-Five index, PSM, pro-social behavior, and pro-social preference are measured.

Additional information

Funding

The GRIPS Emerging State Project of the Japan Society for the Promotion of Science [JSPS KAKENHI Grant Number 25101002].