|Author Name||TSURU Kotaro (Senior Fellow)
|Creation Date/NO.||December 2001 01-E-005|
|Download / Links|
In this paper, we present a path-dependence model for "fast-track" Japanese bureaucrats, especially focusing on its incentive mechanism. Without a performance based pay scheme, the path dependent model can give an incentive to work hard and win "good" promotion to a worker, by linking the rank of his final job to the prize. In particular, the basic path dependent model with equal prize spread can induce the same level of effort at every job post and even "losers" continue to make their efforts to get higher prizes within their opportunities. However, the choice of an incentive scheme may depend on the "amakudari" opportunities of a ministry. Ministries with less "amakudari" opportunities might adopt schemes without revealing the job positions of workers (or the prospect of their prizes) to them. Such strategies can increase the level of effort given the expected prize it should pay, but reduce the welfare of workers.