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What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance into the JTPA Program

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  • James J. Heckman
  • Jeffrey A. Smith
  • Christopher Taber

Abstract

Bureaucratic performance standards are featured in many proposals to increase efficiency in government. These standards reward bureaucrats on the basis of measured outcomes. The performance standards system created under the Job Training Partnership Act (JTPA) of 1982 is often cited as a successful prototype. Under the JTPA system, local training centers receive monetary rewards based on the employment levels and wage rates attained by their trainees upon completion of the program. Critics of the JTPA performance standards system argue that it creates an incentive for program managers to encourage case workers to `cream-skim' the most employable applicants into the program. We examine this issue by analyzing the determinants of acceptance into JTPA among applicants at a training center for which we have data on everyone who applied over a two year period. We find that case workers prefer to accept the least employable applicants, rather than the most employable as suggested by the cream-skimming story. This evidence indicates that concerns about cream-skimming in JTPA may be exaggerated. Instead, the performance standards system may operate as a countervailing force against the preferences of case workers. Using experimental data from the recent National JTPA Study, we also determine whether or not case workers accept those applicants with higher expected gains from the program. Our evidence only weakly supports this hypothesis.

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File URL: http://www.nber.org/papers/w5535.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5535.

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Date of creation: Apr 1996
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Publication status: published as Advances in the Study of Entrepreneurship, Innovation and Economic Growth: Reinventing Government and the Problem of Bureaucracy, Vol. 7, Libecap, Gary, ed., Greenwich, CT: JAI Press, 1996, pp. 191-217.
Handle: RePEc:nbr:nberwo:5535

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  1. John B. Shoven & John Whalley, 1992. "Canada-U.S. Tax Comparisons," NBER Books, National Bureau of Economic Research, Inc, number shov92-1.
  2. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  3. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  4. Daniel McFadden, 1976. "The Revealed Preferences of a Government Bureaucracy: Empirical Evidence," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 55-72, Spring.
  5. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 243-77, Fall.
  6. Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
  7. 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.
  8. Browning, Edgar K, 1987. "On the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 77(1), pages 11-23, March.
  9. James J. Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 778-811.
  10. MaCurdy, Thomas E., 1982. "The use of time series processes to model the error structure of earnings in a longitudinal data analysis," Journal of Econometrics, Elsevier, vol. 18(1), pages 83-114, January.
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