Electronic copy available at: http://ssrn.com/abstract=2439593

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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

vandewalle@fsw.eur.nl steijn@fsw.eur.nl jilke@fsw.eur.nl

Department of Public Administration

Erasmus University Rotterdam

1 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.

Electronic copy available at: http://ssrn.com/abstract=2439593

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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

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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

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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:

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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 best-

suited 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 career-

based, 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.

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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.

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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

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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

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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,

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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

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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.

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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 career-

based, 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

Dependent variable

Sector preference (0=private; 1=public) 15,222 0.37 0.48 0.00 1.00

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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

Level-2 Country Level Variables

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

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 <0.001), meaning

that between-group (country) variance is significantly different from zero, and that therefore

there are cluster effects in the data. In other words, individuals living in the same country are

more similar in terms of public sector preference than individuals are across countries. Having

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determined this, multilevel techniques are required to explain employment sector preferences

across individuals and countries. The intraclass correlation (ICC) is 0.137, indicating that

almost 14% of the total variance is located on the second (country) level. This proportion is

similar to that reported by Houston (2011) in his multilevel analysis of public service

motivation across 11 nations. Respondents' odds of preferring public sector employment is

0.623. As we have seen in Figure 1, this proportion differs considerably across countries.

We then run a number of models, each looking at a different set of variables. Model 1

adds the basic socio-demographic variables, while Model 2 looks at work values.

Subsequently, we explore country-level predictors: first, the external labour market through

economic factors (unemployment and GDP) in Models 3 and 4 respectively; and then the

public sector wage premium (in Model 5). Then we add the internal labour market

characteristics (in Model 6). In Model 7 we did only incorporate those level-2 predictors that

made a significant contribution to our model fit. This parsimonious approach gives us

sufficient degrees of freedom at level-2 to estimate the effects of country characteristics on

individuals' sector preferences. The findings are presented in the form of odds ratios. Also,

standard errors are reported.

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Model 0 Model 1-

Socio-

demographics

Model 2:

Socio-

demographics & motivation

Model 3:

GDP per

capita

Model 4:

Unemployment

Model 5:

Public sector

wage premium

Model 6:

Career- vs.

position-based system

Model 7:

Career- vs.

position-based & GDP per

capita

Intercept 0.623***

(0.089)

0.546***

(0.107)

0.511***

(0.095)

0.486***

(0.083)

0.508***

(0.094)

0.504***

(0.093)

0.722***

(0.147)

0.673*

(0.132) Individual-level

Sex (0=male; 1= female) 1.277***

(0.053)

1.241***

(0.052)

1.240***

(0.052)

1.241***

(0.052)

1.241***

(0.052)

1.241***

(0.052)

1.240***

(0.052)

Age low (under 35 years) 0.835*** (0.051)

0.822** (0.051)

0.821** (0.051)

0.822** (0.051)

0.822** (0.051)

0.822** (0.051)

0.821** (0.051)

Age medium (35-54 years) 0.892*

(0.050)

0.900

(0.050)

0.900

(0.050)

0.900

(0.050)

0.900

(0.050)

0.900

(0.050)

0.900

(0.050) Age high (55 years and older) (reference

category)

Low Income 1.290*** (0.075)

1.297*** (0.076)

1.300*** (0.076)

1.300*** (0.076)

1.297*** (0.076)

1.300*** (0.076)

1.300*** (0.076)

Medium Income 1.238***

(0.056)

1.218***

(0.056)

1.220***

(0.056)

1.218***

(0.056)

1.218***

(0.056)

1.219***

(0.056)

1.220***

(0.056) High income (reference category)

Education (years) 0.960***

(0.006)

0.966***

(0.006)

0.966***

(0.006)

0.966***

(0.006)

0.966***

(0.006)

0.966***

(0.006)

0.966***

(0.006) Current employment (0= private; 1=public) 4.844***

(0.213)

4.585***

(0.204)

4.582***

(0.204)

4.584***

(0.204)

4.588***

(0.204)

4.591***

(0.204)

4.589***

(0.204) Extrinsic work values 1.213***

(0.028)

1.211***

(0.028)

1.213***

(0.028)

1.213***

(0.028)

1.211***

(0.028)

1.209***

(0.028)

Intrinsic work values 0.848*** (0.018)

0.848*** (0.018)

0.848*** (0.018)

0.848*** (0.018)

0.848*** (0.018)

0.848*** (0.018)

Public service motivation 1.224***

(0.027)

1.225***

(0.027)

1.225***

(0.027)

1.224***

(0.027)

1.223***

(0.027)

1.223***

(0.027)

Country-level

GDP per capita 0.9999549** (0.000)

0.999971 (0.000)

Unemployment 1.064

(0.078)

Public sector wage premium 3.831

(5.194)

Position-based system 0.354*** (0.101)

0.418** (0.116)

Hybrid system 1.082 0.956

21

(0.407) (0.341)

Career-based system (reference category)

Model fit -2logL 18,470.90 (2) 16,829.03 16,644.98 16,637.97 16,644.26 16,644.02 16,632.93 16,629.34

Change in -2logL - -1,633.87***

(compared to Model 0)

-192.05***

(compared to Model 1)

-7.01**

(compared to Model 2)

+0.72

(compared to Model 2)

+0.96

(compared to Model 2)

-12.05**

(compared to Model 2)

-15.64** / -

3.59 (not sig.) (compared to

Model 2 / 6)

AIC 18,474.90 16,855.03 16,668.98 16,663.97 16,670.26 16,670.02 16,660.93 16,659.34

BIC 18,490.16 16.923.70 16,760.55 16,763.17 16,769.46 16,769.21 16,767.75

16,773.8

Interclass correlation 0.137 0.189 0.170 0.135 0.166 0.165 0.113 0.100

Significance level: *p<0.05, **p<0.01, ***p<0.001; N = 15,222; Number of countries: 26

22

Evaluation of the model fit

Determining the overall traction and strength of a model in logistic multilevel modelling is

not straightforward. Traditional measures such as R2 are ambiguous (Snijders & Bosker,

1999). Further, the intercept variance will change as other variables are added to the model

and, therefore, we cannot use changes in variance to indicate the explanatory power of the

model. What we can do, however, is to look at the decrease in -2 log Likelihood across

models (last row in the table), and evaluate the decrease using the chi-square statistic. If this

decrease is statistically significant across models, then the model improves fit. Adding socio-

demographic variables (in Model 1) and work values (Model 2) to the unconditional model

significantly improves the results. At the country-level, adding GDP per capita and whether a

position-based or a career-based system is in place, leads to significant improvements.

Unemployment and the wage premium variable do not improve the model. Combining the

significant country-level variables in a single model does not improve model fit (the change in

-2logL between models 6 and 7 is not significant). This makes model 6 our final model. The

decline in -2logL is our primary indicator of model fit. This is confirmed by a decrease in

AIC. However, the second information-based criterion, BIC, increases slightly. Nevertheless,

our main evaluation criteria (change in -2logL and AIC) suggest that model 6 is the model

that best fits the data.

23

Findings

As the individual level accounts for most of the variance in employment sector preference, we

will first report the findings at the individual level (level-1), and then those at the country

level (level-2).

Individual-level findings

Table 3 shows odds ratios, which are typically used in logistic regression. Odds ratios

represent the odds that an outcome (preferring public sector employment) will occur under

certain conditions, compared to that outcome happening in the absence of that condition. An

odds ratio of 1 means that both categories have the same odds. Odds ratios that diverge from 1

indicate stronger effects. These effects have to be interpreted though in relation to the unit

used to measure the independent variable.

Odds for females to prefer public sector employment are 1.241. This means that

female respondents are more likely to prefer public sector employment than men do. More

specifically, the odds for females to prefer public sector employment are higher than those for

men. There is also a positive effect of age, meaning that older people are more likely than

younger people to choose public employment. This supports the finding of Lewis and Frank

(2002) for the US that younger birth cohorts are less attracted to the public sector. Lower and

medium income groups also have a stronger preference for public employment than higher

income groups. The more highly educated respondents are also slightly less likely to opt for

public employment. A person’s current sector of employment has, not surprisingly, in all

models6 a very strong relationship with sector preference: respondents working in the public

sector are considerably more likely to prefer public sector employment.

24

Work values also have a significant effect, and adding them to the model improves

model fit significantly. Here, it is found that being extrinsically motivated is associated with a

preference for public employment, which supports Hypothesis 5. Respondents who would opt

for public employment highly value job characteristics such as job security, high income and

good opportunities for advancement. In line with Hypothesis 4, public service motivation is

also associated with favouring public sector employment: respondents who opt for public

employment consider it important to have a job that allows them to help others and that is

useful to society. However, intrinsic work values are related to a preference for working in the

private sector, which is in accordance with Hypothesis 6. In other words, respondents tend not

to associate public sector work with being allowed to work independently, choosing one’s

own working times or having an interesting job.

Country-level findings

The country-level variables we added to the model contribute little to the explanatory power

of the model. Nevertheless, some findings are worthy of note.

One is that a public sector wage premium is not significant in explaining sector choice when

added as a country-level variable. This contradicts Hypothesis 1 and is surprising because it is

at odds with the expectations derived from the economic literature discussed earlier. It is also

unexpected given the importance of the extrinsic work values and income effects found at the

individual level.

The nature of the public internal labour market does have a significant effect. Results

are in accordance with Hypothesis 3: in countries with a position-based system, public sector

employment is seen as less attractive than in countries with a career-based system.

25

There is mixed evidence for Hypothesis 2. Firstly, GDP has a significant effect, and its

direction suggests that respondents are more likely to prefer working for the government or

the civil service in countries with a low GDP7. To test the robustness of this finding, GDP has

been replaced with GDP growth (3 year average). This variable, however, was not significant.

The effect of unemployment level, although in the expected direction, is not significant. We

thus have only limited support for the link between adverse economic conditions and a

preference for public sector employment. When all the significant country-level variables are

added together, the effect of GDP per capita (just) disappears while the effect of the internal

labour market remains significant. On adding GDP per capita, the effect of the internal labour

market decreases, but model 7 does not fit better than model 6 (which only has the internal

labour market variable) No evidence was found for the existence of significant cross-level

interactions. Because labour market conditions and extrinsic motives may interact (e.g.

extrinsic motives may become more important under bad economic conditions), we have

explicitly tested cross-level interactions between extrinsic motives and GDP, unemployment,

and internal labour market. None of these interactions terms were significant (not included in

the table).

Limitations

This study has a number of data limitations. First, it assumes cross-national measurement

equivalence of the three work-value factors used in the analysis (see Jilke, Meuleman and Van

de Walle, 2013). Although this equivalence was not tested explicitly in this paper, other

researchers using the ISSP 1997 data found modest equivalence across nations for the

intrinsic and extrinsic motivation scales (Huang & van de Vliert, 2003). As in other studies,

and supported by our factor analysis, we included both income and security within the

extrinsic dimension. However, it could be that the effects on sector preference of both these

26

aspects of extrinsic motivation differ across countries. Second, the analysis is based on the

work values scale used in the ISSP. Unlike most research, which measures PSM with an

elaborate and multidimensional scale, the ISSP does not measure PSM as such. Using such a

scale may return a more differentiated view of the impact of PSM. Third, the public sector

wage premium variable is rather crude, lacking comprehensive (sub)sector comparisons

across countries. Fourth, interactions between the country-level variables may exist but cannot

be properly tested statistically because of the relatively small number of countries in the

model. Nevertheless, we have seen that only 14% of the variance in the data is attributable to

the country level. Fifth, the dependent variable is a single item construct and not a scale.

Further concerns are raised by the country-level variation in the proportion of ‘no preference’

answers. These limitations are not uncommon in international comparative research. Finally,

there may exist endogeneity because the current sector of employment may also affect other

preferences and values. A split sample estimation of the final model for public and private

sector workers separately did not indicate substantial differences for work values between

these groups, or with regard to the impact of career versus position system. But there are some

differences regarding income, age, and country level GDP.

Conclusion

This paper started with the observation by Lewis and Frank (2002) that becoming a public

employee involves both choice and chance. We have argued in this paper that public sector

choice depends on both individual characteristics as well as country dependent opportunities

provided by internal and external labour market conditions.

Conceptualized in this way, individual characteristics is shown to be a more important

determinant of public sector employment preference than structural opportunities. According

to our analysis, only 14% of the variance of public sector preference resides on the country

27

level. Moreover, the labour market variables included in our multilevel model were only

partly successful in explaining this variance. This leads to the conclusion that individual

characteristics are a more important determinant of public sector employment than country

level labour market conditions.

Within these individual characteristics, work values are important. Our three

hypotheses in this respect are confirmed, which supports the observation of Delfgaauw and

Dur (2008) that two types of workers (‘dedicated’ and ‘lazy’ ones) are especially attracted to

the public sector. Although these findings are not new, we want to stress them because current

research on PSM seems to underestimate the importance of extrinsic motivation for public

sector employment. Therefore, future research should take into account the fact that people do

not only want to work in the public sector to serve the public good, but that factors such as

money or job security also play a role.

Individual characteristics are also relevant. Older employees, women and the less

highly educated have a stronger preference for public sector employment. . However, we see

that respondents in higher income groups tend to prefer private sector employment. This

probably has to do with a lower wage spread in the public sector and may be associated with

lower probabilities of gaining highly paid public employment (Borjas, 2002). It must be

stressed that these effects are independent of country-level characteristics and are thus

independent from characteristics of the internal and external labour market. Nevertheless, on

the individual level the opportunity structure could still play an important role in determining

public sector employment preference. For instance, it could be that people are not so much

affected by the general labour market conditions in a country, but by specific economic

conditions which for instance only affect the lower educated or younger workers. Further

research into this relation between specific economic conditions and individual characteristics

is therefore needed. Although the effect of country-level characteristics on public sector

28

employment preference is limited, there nevertheless is such an effect. In accordance with

hypothesis 2 a country’s GDP has a minor effect (but level of unemployment does not), but

this effect disappears when internal labour market characteristics are added. In contrast to

hypothesis 1, we did not find an effect of the public sector wage premium on sector

preference. This rather limited support for the effect of external labour market conditions is

surprising.

The most interesting finding at the country level is the confirmation of hypothesis 3,

which states that the public sector is a more preferred sector of employment when it has a

career-based system of employment. This is possibly the result of the fact that the career-

based system is perceived as more attractive because it provides greater security. A relevant

next research question is what happens if the public sector internal labour market changes

from a career-based into a position-based system. Based on our findings, one would expect

that public sector employment preference will decline in such a case.

As outlined above, country level characteristics play only a limited role in the

explanation of public sector employment preference. Moreover, the variables we have used to

explain this country effect have only a limited explanatory power. Obviously, further research

is needed to interpret this country effect more fully. Institutional variables (as Houston, 2011

used to look at welfare regimes) and cultural variables at the country-level are obvious

candidates.

Our paper has extended current research on public sector employment preferences by

including a large number of countries in its analysis and by including individual- as well as

country-level variables. In spite of the discipline’s current focus on PSM, it re-emphasizes the

importance of also looking at extrinsic factors when analyzing public sector employment, and

stresses the need to also consider structural factors which affect the opportunities people have.

29

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1 Some authors use the concept of job attributes preference (Lewis & Frank, 2002), whereas others use work

values (Norris, 2003) or work motives (Groeneveld et al., 2009). These all reflect ‘the extent to which people

desire a variety of specific qualities and outcomes for paid work’ (Konrad et al., 2000). Consequently, we use

‘work values’ in our argument.

2 With the exceptions of Finland and Japan who used 15 and 16 years respectively as the cut-off.

3 A preliminary test with country dummies and with two models, one binomial and one multinomial, revealed no

differences in terms of changes in effect signs. We therefore decided not to run a multinomial multilevel model.

4 The latter category was not included in countries where such terminology is not used. An example is the US

where only ‘working for government’ was used.

5 The reported unemployment rates for Mexico appear to be rather low. This is probably more an influence of the

social security system than the labour market.

6 When running the models without current employment sector, both education and low income cease to be

significant, but age and gender effects strengthen. Not surprisingly, public service motivation is also stronger in

the model without current sector of employment.

7GPD per capita has the perhaps surprising value of 0.999. This is a direct result of the high absolute values of

GDP per capita (see Table 2).