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Curbing Cream-Skimming: Evidence on Enrolment Incentives

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  • Courty, Pascal

    ()
    (European University Institute)

  • Kim, Do Han

    ()
    (University at Albany, SUNY)

  • Marschke, Gerald

    ()
    (University at Albany, SUNY)

Abstract

Can enrolment incentives reduce the incidence of cream-skimming in the delivery of public sector services (e.g. education, health, job training)? In the context of a large government job training program, we investigate whether the use of enrolment incentives that set different 'shadow prices' for serving different demographic subgroups of clients, influence case workers' choice of intake population. Exploiting exogenous variation in these shadow prices, we show that training agencies change the composition of their enrollee populations in response to changes in the incentives, increasing the relative fraction of subgroups whose shadow prices increase. We also show that the increase is due to training agencies enrolling at the margin weaker members, in terms of performance, of that subgroup.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3909.

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Length: 50 pages
Date of creation: Dec 2008
Date of revision:
Publication status: published in: Labour Economics, 2011, 18 (5), 643-655
Handle: RePEc:iza:izadps:dp3909

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Keywords: performance measurement; bureaucrat behavior; cream-skimming; public organizations; enrolment incentives;

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  1. Cragg, Michael, 1997. "Performance Incentives in the Public Sector: Evidence from the Job Training Partnership Act," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 13(1), pages 147-68, April.
  2. Heckman, James J. & Heinrich, Carolyn J. & Smith, Jeffrey A., 2002. "The Performance of Performance Standards," IZA Discussion Papers 525, Institute for the Study of Labor (IZA).
  3. 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.
  4. Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2003. "Incentives in the Public Sector: Some Preliminary Evidence from a UK Government Agency," The Centre for Market and Public Organisation 03/080, Department of Economics, University of Bristol, UK.
  5. Jacob, Brian A., 2005. "Accountability, incentives and behavior: the impact of high-stakes testing in the Chicago Public Schools," Journal of Public Economics, Elsevier, Elsevier, vol. 89(5-6), pages 761-796, June.
  6. James J. Heckman & Jeffrey A. Smith & Christopher Taber, 1996. "What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance into the JTPA Program," NBER Working Papers 5535, National Bureau of Economic Research, Inc.
  7. Ladd, Helen F., 1996. "The Dallas School Accountability and Incentive Program: An Evaluation of Its Impacts on Student Outcomes," Working Papers, Duke University, Department of Economics 96-18, Duke University, Department of Economics.
  8. Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating," NBER Working Papers 9413, National Bureau of Economic Research, Inc.
  9. Kathryn Anderson & Richard V. Burkhauser & Jennie E. Raymond, 1993. "The effect of creaming on placement rates under the Job Training Partnership Act," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(4), pages 613-624, July.
  10. Buchner, Florian & Wasem, Jurgen, 2003. "Needs for further improvement: risk adjustment in the German health insurance system," Health Policy, Elsevier, Elsevier, vol. 65(1), pages 21-35, July.
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Cited by:
  1. Carolyn J. Heinrich & Gerald Marschke, 2010. "Incentives and their dynamics in public sector performance management systems," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(1), pages 183-208.
  2. Pierre Koning & C.J. Heinrich, 2009. "Cream-skimming, parking and other intended and unintended effects of performance-based contracting in social welfare services," CPB Discussion Paper 134, CPB Netherlands Bureau for Economic Policy Analysis.

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