How to Make Bureaucrats Engage in New Challenges? Evidence from German Reunification

Abstract

The willingness of bureaucrats to become engaged and face new challenges is crucial for the ability of states to respond to unexpected and challenging circumstances. We study how the public administration responded to the challenge of creating a new fiscal administration in the East German federal states after German reunification. The capacity building measures in the fiscal administration required active engagement of West German officers. Participation was voluntary and based on incentives. Drawing from a unique self-collected micro-dataset we look at how organisational measures affected individual decisions to engage. At the extensive margin, our results show that financial and institutional incentives were successful for soliciting participation. At the intensive margin, we provide evidence consistent with a trade-off between extrinsic incentives and intrinsic individual motivation. These findings indicate that selection is an important feature in bureaucratic engagement. We propose counterfactual experiments to understand the extent to which alternative organisational measures can improve participation and hence bureaucratic engagement.