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Incentives in the Public Sector: Evidence from a Government Agency Author info | Abstract | Publisher info | Download info | Related research | Statistics Simon Burgess
Carol Propper
Marisa Ratto
Emma Tominey ()
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This paper addresses a lack of evidence on the impact of performance pay in the public sector by evaluating a pilot scheme of incentives in a major government agency. The incentive scheme was based on teams and covered five different targets, measured with varying degrees of precision. We use data from the agency's performance management system and personnel records, plus matched labour market data. We focus on three main issues: whether performance pay matters for public service workers, what the team basis of the scheme implies, and the impact of the differential measurement precision. We show that the use of performance pay did have a significant effect on the main quality measure (job placements), but that there was significant heterogeneity of response. This heterogeneity was patterned as one would expect from a free rider versus per monitoring perspective. We found that the incentive had a substantial positive effect in small teams, and a negative response in large teams. We found little impact of the scheme on quality measures, and we interpret this as due to the differential measurement technology. We show that the scheme in small teams had non-trivial effects on output, and our estimates suggest that the use of incentive pay is much more cost effective than a general pay rise.
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Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number
04/103.
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Length: 55 pages
Date of creation: Mar 2004Date of revision:
Handle: RePEc:bri:cmpowp:04/103Contact details of provider: Postal: 2 Priory Road, Bristol, BS8 1TX Phone: 0117 33 10799 Fax: 0117 33 10705 Email: Web page: http://www.bris.ac.uk/cmpo/ More information through EDIRC
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Keywords: incentives ; public sector ; teams ; performance ; personnel economics ; Other versions of this item:
Find related papers by JEL classification: J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Pierre Koning, 2009.
"The effectiveness of Public Employment Service workers in the Netherlands ,"
Empirical Economics ,
Springer, vol. 37(2), pages 393-409, October.
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Buurman, Margaretha & Dur, Robert, 2008.
"Incentives and the Sorting of Altruistic Agents into Street-Level Bureaucracies ,"
IZA Discussion Papers
3847, Institute for the Study of Labor (IZA).
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Other versions: Helen Simpson, 2007.
"Productivity in Public Services ,"
The Centre for Market and Public Organisation
07/164, Department of Economics, University of Bristol, UK.
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Other versions: Pierre Koning, 2006.
"Measuring the Effectiveness of Public Employment Service (PES) Workers ,"
CPB Discussion Papers
73, CPB Netherlands Bureau for Economic Policy Analysis.
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Simon Burgess & Carol Propper & Marisa Ratto & Stephanie von Hinke Kessler Scholder & Emma Tominey, 2009.
"Smarter Task Assignment or Greater Effort: the impact of incentives on team performance ,"
The Centre for Market and Public Organisation
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[Downloadable!]
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