EXTRINSIC MOTIVATION, PSM AND LABOUR MARKET CHARACTERISTICS: A MULTILEVEL MODEL OF PUBLIC SECTOR EMPLOYMENT PREFERENCE IN 26 COUNTRIES1
Forthcoming in International Review of Administrative Sciences
Steven Van de Walle
Bram Steijn
Sebastian Jilke
[email protected]
[email protected]
[email protected]
Department of Public Administration Erasmus University Rotterdam
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We would like to thank Dion Curry, Niels Schenk and Sandra Groeneveld for their valuable assistance. We also
would like to thank the University of Bergen, department of administration and organizational science, for the hospitality given to one of the authors who wrote part of this article during his sabbatical there; The research leading to these results has received funding from the European Union’s Seventh Framework Programme under grant agreement No. 266887 (Project COCOPS), Socio-economic Sciences and Humanities.
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Abstract Research findings have been contradictory with respect to the determinants of why people choose a public sector job. In this paper we use an internationally comparative design with data from 26 countries to explain public sector employment preference. The study shows that on the individual level public service motivation and extrinsic motivation both are important drivers for this preference. Intrinsic motivation, in turn, is negatively related with people's inclination to work for the public sector. Moreover, having a lower income and lower education is associated with a greater preference for public sector employment. This suggests that working for the public sector is seen as a good and safe career option. Our results furthermore show that variation in this preference can only partly be explained by country differences. Nevertheless, in countries with a career- rather than position-based system of public employment people are more likely to prefer public employment.
Points for practitioners Attracting the best and brightest to work for the public sector requires an insight into why people prefer public over private sector employment. This paper looks at what makes people prefer public sector employment in 26 countries. Findings reveal that public service motivation (helping other people, being useful to society) and extrinsic motives (job security, a high income, opportunities for advancement) play an important role in this preference. Still, there are considerable differences between countries. In countries with a career-based system of public employment, working in the public sector is seen as more attractive.
Keywords: Public service motivation, work motives, work values, public sector sorting, public employment
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Introduction ‘Who wants to work for the government?’ is a provocative question asked by Lewis and Frank (2002). According to their answer ‘becoming a public sector employee involves both choice and chance’ (2002: 395). Like Lewis and Frank (2002) our focus in this paper is on the question why people prefer a public sector job. We argue that the choice for public employment is affected by both individual preferences as well as by country dependent structural labour market characteristics. Choice is in our view thus dependent on preferences and opportunities. As only a few studies have looked at the effect of the opportunity structure on public employment preference, this will be our main focal point. Nevertheless, two mechanisms situated on the level of individual job attribute preferences should be mentioned when explaining why people prefer a public sector job over one in the private sector. The first mechanism, popular in recent public administration literature, points to the importance of public service motivation (PSM) (Perry & Wise, 1990; Vandenabeele, 2008; Ritz & Waldner, 2011). According to Perry and Wise (1990: 368) PSM ‘may be understood as an individual’s predisposition to motives grounded primarily or uniquely in public institutions and organizations’. In other words, people are attracted to a public sector job because they want to contribute to society or to the public good. The second mechanism is put forward by economists and is quite different. In this view, public sector workers are shirkers, self-interested and not interested in performing for the public good (Niskanen, 1971; Downs, 1967). They are mainly attracted to the public sector by good employment conditions, high job security and low (and difficult) monitoring of individual performance (Delfgaauw & Dur, 2008). At first glance, these two explanatory mechanisms for public sector attractiveness are contradictory. In this respect, Delfgaauw and Dur (2008) suggest that two types of workers
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are attracted to the public sector: ‘dedicated’ workers driven by PSM, and ‘lazy’ workers who may crowd out the dedicated ones. However, preferences based on job attributes (or work values)1 are not the only determinants of career choice. Lewis and Frank (2002) observe that the preference for working in the public sector declines with each birth cohort. Others refer to economic conditions. For instance, Llorens and Stazyk (2011: 119), although addressing turnover rather than sector preference, observe that ‘in lean economic times, one generally expects public sector employees to be less likely to separate because of the decreased likelihood of alternative employment opportunities’. Thus a preference for public sector employment is not constant, but varies over time and space. Few studies have looked at this preference from a comparative perspective; one of the few exceptions (Norris 2003) showed that public sector employment preference varies widely among countries. Norris (2003) suggested three possible factors to explain this variation: public management reform, cultural differences and structural patterns in the labour force. With respect to the latter, we will argue that both characteristics of the internal (public) labour market (career structure) and external labour market conditions (wage differences, unemployment and economic growth) are relevant. In order to look at the effect of these internal and external labour market conditions on the preference for public sector employment, we will use an international comparative perspective using data for 26 countries taken from the International Social Survey Programme (ISSP 2005b). Our research question is: what is the effect of internal and external labour market conditions on public sector employment preference? In the next section we first hypothesize on the effect of labour market conditions on public sector employment preference, resulting in three hypotheses. Following this, we will 4
briefly discuss the effect of work values, leading to a further three hypotheses. We will then describe the data. Multilevel statistics are used to explain public sector employment preference in 26 countries. We end by discussing the limitations and implications of our findings.
Theoretical considerations
Differences in employment sector preference between countries: the importance of the labour market Norris (2003) reported large differences between countries with respect to the preference for working within the public sector. According to her data (based on ISSP, 1997), there is a strong preference for public employment in post-Communist and developing countries, and a lower desire in Anglo-American and Scandinavian countries. It is not difficult to imagine a possible effect of labour market conditions on this preference. The idea of a ‘rational man’ is a cornerstone of traditional economic theory (Simon, 1955). According to this theory people will, confronted with several possible courses of action, choose the option which will be most profitable for them. Applied to sector of work preference, people will thus be attracted to a sector that offers favourable conditions. With respect to the external labour market, we will in this respect look at two aspects: a) the differences in wages between the public and private sector (the wage premium), and b) economic conditions.
Wage premium Classical economic theory predicts that people will behave rationally. Applied to wages, this implies that they will prefer jobs with a higher wage over lower paid jobs. Various studies 5
have shown that, in this respect, a ‘wage premium’ makes the public sector a more attractive employer (Gunderson, 1979; Tansel, 2005). As the public sector will, in general, not be able to set wages in the private sector the wage premium can be seen as an external labour market condition. Boudarbat (2008) claims that this mechanism explains why university graduates in Morocco prefer public to private employment. Although Llorens and Stazyk (2011) did not find that public sector wage premiums explained differences in employee turnover between US states, several studies have shown that, in some countries, the public sector does pay relatively higher wages (Bender, 1998; Gornick & Jacobs, 1998), and that such a wage premium affects employment sector preferences (Adamchik & Bedi, 2000; Tansel, 2005). Therefore, we will test the following hypothesis:
H1. The higher the public sector’s wage premium in a country, the stronger the preference for working in the public sector.
Economic conditions Boudarbat (2008) notes that ‘employment in the public sector is generally desired for its stability, which attracts risk-adverse workers’. On a country level, this argument becomes especially valid during times of economic upheaval: job security will be more important during difficult economic times. Several studies suggested that this is indeed the case. According to Groeneveld et al. (2009), economic circumstances affect public sector attractiveness. They found that people looking for job security will prefer public sector employment during an economic crisis, but might switch to the private sector during an economic boom since job security is then not an issue. A similar argument was developed by Llorens and Stazyk (2011) in an analysis of differences in turnover between US states. We will therefore test the following hypothesis: 6
H2. Weak economic conditions and levels of unemployment in a country are associated with a stronger preference for working in the public sector.
Characteristics of the internal labour market So far, we have looked at the external labour market to explain differences in sector employment preferences. However, characteristics of the internal labour market will also be important. Doeringer and Piore (1971) highlighted the importance of the internal labour market, defined as ‘an administrative unit where the levels of employment and wages are determined by a set of internal administrative rules and procedures’. Within the public sector, two types of internal market can be discerned: career-based and position-based systems (OECD, 2005; Hammerschmid et al., 2007). In career-based systems, employees are expected to spend their whole working life in public service. After initial post-education entry, their careers depend to a large part on decisions made by the organization. Possibilities to enter public employment in later life are limited (OECD, 2005: 164). In contrast, within position-based systems, the bestsuited candidate is recruited to fill a vacancy and external recruitment is relatively common. Such a system provides less security for public sector employees as they have to compete with others to achieve a career move. We expect that the career-based system is more attractive to prospective public sector employees as it provides greater security. Thus, we will test the following hypothesis:
H3. The preference for working for the public sector is higher in countries with a careerbased, rather than a position-based, internal job market.
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Work values Although our focus is on explaining differences between countries in employment sector preference, individual work values will also matter. In this respect, Norris (2003) noted that two distinct ‘motivational values’ contributed to explaining public sector employment differences in nearly all geographical regions. Firstly, she noted that those who want a job that is useful for society prefer public sector employment and, secondly, that the same holds for people with a preference for job security. This brings us back to the mechanisms outlined in the introduction for explaining a preference for public sector employment. Perry and Wise (1990) have put the concept of public service motivation on the academic agenda. They formulated the hypothesis that a higher level of PSM is related to greater interest in public sector employment. Since then, many studies have confirmed their initial hypothesis (Vandenabeele, 2008; Steijn, 2008, Wright & Christensen, 2010). Others, however, have argued that it is job type and type of occupation rather than just sector that matters (Christensen & Wright, 2011; Houston, 2011; Kjeldsen & Jacobsen, 2013). The fourth hypothesis is therefore formulated as follows:
H4. A higher level of PSM is associated with a higher preference for working in the public sector.
Several authors have suggested that ‘selfish’ motives rather than PSM may attract people to the public sector. Hypotheses 1-3 already dealt with the importance of these motives for sector of employment preference on a country level. Here we are interested in effects at the individual level as people will differ in the degree to which selfish motives are important to them. 8
The classic distinction between extrinsic and intrinsic motivations in Herzberg’s (1966) theory, although controversial (Latham, 2007: 102), can be used here. Behaviour that is intrinsically motivated is undertaken because of the inherent satisfaction derived from a task (Houston, 2011). In contrast, extrinsic motivational factors lie outside the job: people work ‘because they have to’ - it provides them with money or security (Groeneveld et al. 2009). In other words, ‘the task is undertaken for instrumental reasons and therefore satisfies personal needs indirectly’ (Houston, 2011: 762). Economic theorists tend to stress the importance of extrinsic motivation as an important determinant of public sector employment preference (Downs, 1967; Delfgaauw & Dur, 2008). However, the same argument is made within the public administration literature. For instance, Perry and Hondeghem (2008: 3) note that the ‘public sector has traditionally offered some strong extrinsic motivators, such as security of tenure, the career system, and pension systems’. It is generally assumed that public sector employees value job security more than private sector workers do (Lewis & Frank, 2002; Norris, 2003; Houston, 2011) although some studies disagree (Crewson, 1997). With respect to pay, another important extrinsic motivator, the empirical evidence is less clear. Some studies have found that public servants are less motivated by pay (Buelens & Van den Broeck, 2007; Houston, 2011), but the finding of Lewis and Frank (2002), that a high income was relatively more important for those wanting to work for the US government, contradict this. In a comparative study, Houston (2011) found that, especially in Anglo-Saxon countries, ‘controlled extrinsic motives’ (that include high income and job security) are relatively important. Although the empirical evidence on pay as an extrinsic motivator for public sector preference is thus somewhat inconclusive, the overall evidence on all aspects of extrinsic motivation leads to the following hypothesis.
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H5. A higher extrinsic work orientation is associated with a stronger preference for working in the public sector.
Several studies have found that public sector workers are more intrinsically motivated (Crewson, 1997; Houston, 2000). However, some recent studies report a different conclusion. Buelens and Van den Broeck (2007) for instance found that Flemish civil servants were less motivated by self-development and responsibility; Norris (2003) found that people who preferred to work in business gave greater priority to autonomy and the ability to work independently. Houston (2011) did not find differences regarding the sector and whether or not one finds ‘an interesting job’ a very important work motive. He does, however, find significant differences with respect to the importance adhered to ‘help other people’ and ‘a useful job to society’. This finding raises the question whether the previous finding that public sector workers are more intrinsically motivated has in fact only to do with PSM as a special dimension of intrinsic motivation. If the latter is indeed the case, we can formulate the following hypothesis.
H6. A higher intrinsic work orientation is associated with a lower preference to work in the public sector.
Data We used data from the Work Orientations III survey (2005) that was undertaken within the International Social Survey Programme (ISSP 2005b). This survey used a multistage stratified random sample of respondents aged 18 and above2. Data were collected using a standardized questionnaire, but with a variety of methods (self-completion by mail, CAPI etc.) depending on local conditions. 10
The results from this survey have frequently been used to study work values. We add to this work by looking at a large number of countries. We expand Norris’ (2003) approach, using the ISSP 1997, by using a multilevel design. In the next section we will explain why such a design is preferable. Houston (2011) used the 2005 survey to look at work motives within a subset of eleven countries but did not relate these motives to public sector employment preferences. Taylor and Westover (2011; see also Westover & Taylor, 2010) used both the 1997 and 2005 ISSP data to relate work motives to job satisfaction within a subset of seven countries. Their study does not address a possible preference for public sector employment and also does not use a multilevel design. Taylor and Taylor (2011) also used a subsample of 15 countries to look at the relationships among efficiency wages, PSM and effort, but did also not use a multilevel design. The same was true for Jin (2013a, 2013b) who looked at PSM and sector choice among unemployed people in several countries. We use a subset of the data consisting of respondents up to 65 years of age – the official upper limit retirement age in many countries (notwithstanding differences across countries and between male and female retirement ages). Further, the analysis is restricted to respondents who were currently in paid employment because we assume jobless respondents will be interested in any job, whether public or private. We focus on those 26 countries in the dataset that are members of the EU or OECD: Australia, Belgium (Flanders only), Bulgaria, Canada, Cyprus, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Israel, Japan, Korea, Latvia, Mexico, New Zealand, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, United States, and United Kingdom (Great Britain only). This resulted in a total dataset of 19,271 respondents, with a country-level sample size ranging from 465 (Hungary) to 1,202 (Denmark). Although response rates varied across countries (see Scholz et al., 2008), stringent checks and fieldwork controls by the ISSP mean that the sampling can generally be considered as representative. After deleting cases with missing values, the 11
analysis was carried out with a dataset where N=15,222. The income variable accounted for the largest number of missing data (13.9% of the original sample). Respondents who did not report income were slightly more likely to prefer public sector employment than other respondents. Also, people currently working in the private sector are less likely to report their income, but both groups do not differ in a statistically significant way in terms of age and gender. Moreover, non-response on income items tends to be concentrated at the tails of the wider income distribution and is also relatively random (Riphahn & Serfling, 2005).
Variables and statistical model Modelling strategy Considering both individual-level and country-level factors, we seek to explain preferences for public sector employment in a set of 26 countries. We use a multilevel model because the data is nested and, therefore, there could potentially be clustering effects in the data due to country-specific public sector or labour market related variables (Guo & Zhao, 2000). Further, using a multilevel model makes it possible to assess which country-level factors explain differences between countries. Using country dummies instead would only allow the researcher to observe and control for country-level effects, not to explain them. A danger is that small level-2 sample sizes (country-level) could lead to biased estimates of standard errors. However, a sample size of 26 (countries) is considered sufficient for random intercept models with binary outcomes to produce sufficiently unbiased estimates (Stegmueller, 2013).
Dependent variable: public sector employment preference A preference for public sector employment was measured as follows: ‘Suppose you were working and could choose between different kinds of jobs, which of the following would you personally choose?’ Respondents could choose between: ‘I would choose working in a private 12
business’ and ‘I would choose working for the government or civil service’. In theory, there was a third spontaneous response - ‘no preference’ - but respondents were not provided with this answer category. However, there was a ‘cannot choose’ option and its usage differed substantially across countries, and in some cases exceeded 20%. These differences suggest that there were country differences in fieldwork protocols. We decided to combine the ‘cannot choose’ answers with ‘choose working in a private business’3. Thus, the category ‘choosing to work for the public sector’ reflects a clear and deliberate choice. Figure 1 shows how sectoral preference varies across countries: with over 80% in Cyprus and over 60% in Slovenia opting for the public sector, but below 20% in New Zealand, Sweden and Denmark. This is in line with Norris’s (2003) findings based on the ISSP 1997 survey. Figure 1: Sector preference, by country (N=15,222)
Independent variables at the individual level Socio-demographic variables. Earlier studies have shown that work values are related to gender (Tolbert & Moen, 1998), age (Kooij et al., 2011) and educational level (Rosseel, 13
1985). Age was recoded into three categories. Education was measured as the number of years of continuous full-time education undertaken by the respondent. In the case of respondents still in education (e.g. students who also work for pay at the same time), this value was recoded as the mean years of education of respondents in that country who had completed a similar education level.
Sector of employment. The analysis was limited to respondents currently in paid employment. Sector of employment was recoded as a dichotomous public/private variable. Respondents who indicated that they worked for the government or for a publicly owned company or nationalized industry4 were coded as working in the public sector; those working for a private firm and the self-employed were coded as working in the private sector.
Income was measured by asking for the respondents’ average net monthly income. Within each country, we divided the incomes into three roughly equal-sized groups (low, medium and high incomes), to establish the respondent’s position relative to the overall income distribution in the country. These within-country categorizations were then transformed into cross-national income dummies (low, medium and high incomes). This means that a respondent’s income category is relative to the income distribution in their country. Income was not corrected for family situation or working hours.
Work values were measured using eight items on a five-point Likert scale (ranging from very important to not important at all). These were of the form, ‘For each of the following, please tick one box to show how important you personally think it is in a job’. A factor analysis with oblimin rotation (to allow the factors to correlate) returns three factors which we label extrinsic work values, intrinsic work values and public service motivation, in line with 14
Westover and Taylor’s analysis of workplace attributes and job satisfaction using the same data (2011). Factor scores were used in the analysis.
Table 1: Factor analysis on work values items (Pattern matrix) Personally important in job Intrinsic work values Extrinsic work values Public service motivation Job security -.227 .732 -.165 High income .105 .831 .178 Opportunities for advancement .237 .634 -.082 An interesting job .557 .098 -.178 Work independently .756 -.072 -.128 Help other people .097 -.025 -.875 A job useful to society .007 .040 -.888 Decide time of work .751 .035 .105 Oblimin rotation with Kaiser Normalization. The three dimensions account for 63.3% of the common variance in the initial correlation matrix
Country-level independent variables At the country level, we distinguish three variables: public sector wage premium (Hypothesis 1), economic conditions (measured by two variables Hypothesis 2) and internal labour market (Hypothesis 3).
Public sector wage premium. Unfortunately, there are no good, comparable cross-national data that could be used to measure the extent of the wage gap in all countries included in our sample. Consequently, we constructed our own public sector wage premium indicator to measure the gap between public and private sector wages. We used data from ISSP 2005 to compare mean respondent incomes, using ANOVA to control for age, education and gender. Taylor and Taylor (2011) used a similar method to estimate the ‘efficiency wages’ of 15 countries included in the ISSP 2005 survey (but see also Llorens and Stazyk’s (2011) approach). We limited our analysis to those respondents currently in paid employment who had finished their education. This resulted in an indicator comparing mean public salaries to mean private salaries in a country, as shown in Figure 2. 15
Figure 2: Mean country public sector wage as ratio of mean private sector wage
Figure 2 shows that public wages tend to be lower than private ones in most Central and Eastern European countries, and in Scandinavian countries. However, there is a public sector wage premium in many Southern European countries. The largest public sector wage premiums found were in Germany and Japan.
We use two indicators for the economic condition of a country having hypothesized that adverse economic conditions will increase preferences for public sector employment:
GDP per capita in 2005 obtained from World Bank National Accounts Data and based on purchasing power parity in international $. A high GDP is seen as indicating good economic conditions.
Unemployment rate. High unemployment is indicative of adverse economic conditions. We use 2005 unemployment rates as provided by the International Labour Organization.
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As a final variable, we add a variable reflecting whether a country has a career-based or a position-based system of public employment. This distinction is ideal typical. In reality, one will see various systems for different categories of public sector workers. Top public officials may, for instance, be appointed on short-term contracts, whereas general civil servants are recruited into a career-based system. We therefore categorized countries as having a careerbased, a position-based or a hybrid system of public sector employment. This categorization was based on a combination of five existing studies that focus on various subsets of countries. The main source for constructing this variable is the OECD’s Government at a Glance 2009, in which selected countries were categorized by the type of recruitment system used in central government in 2005. Other sources were: Hammerschmid et al.’s study of HR systems in the EU27 (2007); a World Bank study on the Senior Public Service (2005); the Quality of Government Institute’s Expert Survey with a variable on the closedness of recruitment (Teorell et al., 2011); and a EUPAN-commissioned study on senior civil servants in Europe (Kuperus & Rode, 2008). In general, there was considerable consensus among the sources. If no consensus emerged, countries were categorized as having a hybrid system.
Analysis A multilevel logistic model is appropriate because the dependent variable is binary. We use Stata for our analysis of unit-specific models and consequently report odds ratios. All Level-2 variables have been mean centred. Error! Reference source not found. reports the descriptive statistics. Correlations between country-level variables are all lower than .45.
Table 2: Descriptive statistics N
Mean
SD
Min
Max
15,222
0.37
0.48
0.00
1.00
Dependent variable Sector preference (0=private; 1=public)
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Level-1 Individual Variables Sex (0=male; 1=female)
15,222
0.49
0.50
0.00
1.00
Age low (under 35 years)
15,222
0.32
0.47
0.00
1.00
Age medium (35-54 years)
15,222
0.53
0.50
0.00
1.00
Age high (55 years and older)
15,222
0.15
0.36
Education (years)
15,222
13.14
3.61
0.00
44.00
Current work sector (0=private; 1=public)
15,222
0.31
0.46
0.00
1.00
Income (low)
15,222
0.19
0.39
0.00
1.00
Income (medium)
15,222
0.36
0.48
0.00
1.00
Income (high)
15,222
0.45
0.50
0.00
1.00
Extrinsic work values
15,222
-0.03
1.00
-5.48
1.71
Intrinsic work values
15,222
-0.02
1.00
-5.31
2.58
Public service motivation
15,222
-0.01
1.00
-4.77
2.24
GDP per capita
26
27,886
9,084
9,818
47,305
Unemployment5
26
6.59
2.23
3.50
11.10
Public sector wage premium
26
1.01
0.12
0.80
1.21
Career-based system
26
0.50
0.51
0.00
1.00
Position-based system
26
0.35
0.49
0.00
1.00
Hybrid system
26
0.15
0.37
0.00
1.00
Level-2 Country Level Variables
Unconditional model We first run the intercept-only, or unconditional, model (Model 0), and subsequently estimate the extent of the total variance explained on the country level. We find that the chi square value is significant in the intercept-only model (χ2 = 1499.38, df = 26, p
