Effort as Investment: Analyzing the Response to Incentives
AbstractWe analyze a model in which incentives in one period on one task can affect output more broadly through learning. If agents can invest in human or organizational capital, then output will increase both before and after short-term incentives. We develop a model of these e¤ects, and then we evaluate its predictions using data from hospitals in Britain during a series of limited-time performance incentives offered by the government. We …nd empirically that these policies increase performance not only during the incentivized periods but also before and after, matching the preditctions of our model. We also examine performance along non-incentivized dimensions of quality of care and find little evidence of classical effort substitution.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp07-024.
Date of creation: May 2007
Date of revision:
Contact details of provider:
Postal: 79 JFK Street, Cambridge, MA 02138
Web page: http://www.ksg.harvard.edu/research/working_papers/index.htm
More information through EDIRC
Find related papers by JEL classification:
- D20 - Microeconomics - - Production and Organizations - - - General
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.:
- Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June.
- David Dranove & Daniel Kessler & Mark McClellan & Mark Satterthwaite, 2002.
"Is More Information Better? The Effects of 'Report Cards' on Health Care Providers,"
NBER Working Papers
8697, National Bureau of Economic Research, Inc.
- David Dranove & Daniel Kessler & Mark McClellan & Mark Satterthwaite, 2003. "Is More Information Better? The Effects of "Report Cards" on Health Care Providers," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 555-588, June.
- Paul Oyer, 1998. "Fiscal Year Ends And Nonlinear Incentive Contracts: The Effect On Business Seasonality," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 149-185, February.
- Heckman, James J & Heinrich, Carolyn & Smith, Jeffrey, 1997. "Assessing the Performance of Performance Standards in Public Bureaucracies," American Economic Review, American Economic Association, vol. 87(2), pages 389-95, May.
- Uri Gneezy & Aldo Rustichini, 2000.
"Pay Enough Or Don'T Pay At All,"
The Quarterly Journal of Economics,
MIT Press, vol. 115(3), pages 791-810, August.
- Canice Prendergast, 2007. "The Motivation and Bias of Bureaucrats," American Economic Review, American Economic Association, vol. 97(1), pages 180-196, March.
- Milton Harris & Bengt Holmstrom, 1981.
"A Theory of Wage Dynamics,"
488, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Stephen Coate & Stephen Morris, .
CARESS Working Papres
97-2, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Stephen Coate & Stephen Morris, . ""Policy Persistence ''," CARESS Working Papres 95-19, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Stephen Coate & Stephen Morris, . "Policy Persistence," Penn CARESS Working Papers 8a66677895e9fcb3f6d813c0c, Penn Economics Department.
- Canice Prendergast, 2003. "The Limits of Bureaucratic Efficiency," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 929-958, October.
- McNichols, Maureen F., 2000. "Research design issues in earnings management studies," Journal of Accounting and Public Policy, Elsevier, vol. 19(4-5), pages 313-345.
- Stein, Jeremy C, 1989. "Efficient Capital Markets, Inefficient Firms: A Model of Myopic Corporate Behavior," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 655-69, November.
- Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
- Propper, Carol & Sutton, Matt & Whitnall, Carolyn & Windmeijer, Frank, 2010.
"Incentives and targets in hospital care: Evidence from a natural experiment,"
Journal of Public Economics,
Elsevier, vol. 94(3-4), pages 318-335, April.
- Carol Propper & Matt Sutton & Carolyn Whitnall & Frank Windmeijer, 2008. "Incentives and Targets in Hospital Care: Evidence from a Natural Experiment," The Centre for Market and Public Organisation 08/205, Department of Economics, University of Bristol, UK.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.