Bureaucrats and Politicians: Electoral Competition and Dynamic Incentives

This paper examines the effect of electoral competition on bureaucratic performance. A unique dataset from India is constructed by matching details of individual bureaucrats’ work histories with local public good projects chosen by politicians. The fact that administrative and electoral boundaries do not perfectly overlap is used to examine the performance of the same bureaucrat across different politicians. Interaction of bureaucrats’ predetermined promotion screening timings with electoral cycles is used to capture variation in politicians’ ability to use dynamic incentives. The results show that bureaucrats perform better when they are closer to their pre-determined promotion screening dates. However, there is heterogeneity in response – bureaucrats perform better for those politicians whose probability of being in office at the time of promotion is higher. The evidence suggests that higher electoral competition limits politicians’ ability to use dynamic incentives, resulting in worse bureaucratic performance.