Essays in development and organizations

This thesis contains three essays on development and organizations. Chapter 1 asks how much discretion should be given to politicians in the allocation of public positions. The discretionary allocation of positions by patronage remains widespread both in developing and developed countries; how patronage affects organizational performance, however, remains understudied. Using historical personnel and public finance data from the administration of the British Empire, I study how a civil service reform affected the allocation and performance of governors who are socially connected to their superior. Chapter 2 focuses on the role of career incentives in explaining performance differences among modern Indian bureaucrats. While rigid progression rules - such as seniority-based promotions and age-based retirement - prevent favoritism by shielding bureaucrats from political interference, these rigidities may also disincentivize: high performers cannot be fast-tracked, and low performers must be retained. We combine administrative data from the Indian Administrative Service (IAS) with survey data on the perceived effectiveness of civil servants to study how the combination of rigid entry, progression and retirement rules acts to disincentivize modern day civil servants. Chapter 3 moves beyond public organizations to study the role of collective reputation in a private organization. Using data from an online labour market where the country of residence is the salient group characteristic, I document a mechanism through which collective reputation perpetuates group inequality. Using an instrumental variables strategy, I identify reputational externalities between an employer’s first hire and the propensity to contract more workers from the same country. I provide empirical evidence that collective reputation serves as a coordination device, enabling workers to positively sort with employers.