Description:

Speaker: Leander Heldring

Title: The Success of the Informal State in England

Abstract: We estimate the effectiveness of the informal state in Britain. Until the late 19th century, the size of the salaried bureaucracy was about 10 percent of the size of the unsalaried, community based, bureaucracy which supplied public goods, maintained order, and staffed the legal sector. In a new dataset of formal and informal local bureaucrats operating in cities we show that informally incentivized bureaucrats do better on a range of public tasks. Higher level bureaucrats, such as mayors, were motivated by a combination of status and threats of punishment. They were selected from the gentry class, which was culturally focused on public service. Boroughs, which typically did not have direct tax revenue, attracted such individuals that could not be hired at market wages. Only after the Industrial Revolution, when the central state acquired sufficient revenue to pay everyone was the British government formalized.