May 9th, 2019 “Kraks Fond Seminar”

Presenter: Morten Bennedsen KU og INSEAD

May 9th, 2019 at 11.00-12.00

Co-authors: Morten Bennedsen KU og INSEAD

Where: Kraks Fond, Frederiksholms Kanal 30, seminar room


Public Sector Leadership

We document the impact of leadership on employee effort in the public sector in Denmark. Using hospitalization of leaders, we show the causal impact of leaders on employee effort measured through employee absenteeism both in the entire public sector and in the three main sub sectors of health, education and public administration. We identify four aspects of leadership (personal traits, shocks and use of prescription medicine, incentives structures and entity organization) and document the correlation with employee absenteeism. We then decompose absenteeism into incentives (unit) effects and selection (employee) effects and we find that the incentives effects explains between 66 and 82 pct of the variation in effort.  We show important variation in correlation between the four leadership characteristics and incentives and selection effect across the three main sub sectors. Our result are consistent with the notion that leaders personal characteristics and their actions are crucial in promoting employee effort in the public sector.


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