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Performance Incentives and Bureaucratic Behavior: Evidence from a Federal Bureaucracy

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Author Info
Gerald Marschke

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Abstract

This paper examines the effects of performance incentives in a federal job training program for the poor. I find that job training bureaucrats respond to incentives in ways that are consistent with a simple model of bureaucratic behavior. Additionally I am able to test whether attempts by the program's incentive designers to improve the precision of performance measures in the late 1980s increased or decreased efficiency. My ability to relate precisely formulated, agent-level incentives to precisely measured agent-level performance outcomes, activities, and productivity sets this paper apart from most other empirical studies of incentives in organizations. I discuss my results in the context of the greater incentive literature, as well as the literature on incentives in job training programs.

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Publisher Info
Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number 00-09.

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Date of creation: 2000
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Handle: RePEc:nya:albaec:00-09

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
Phone: (518) 442-4735
Fax: (518) 442-4736

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
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Web: http://www.albany.edu/econ/dp/index.html

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Find related papers by JEL classification:
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
I3 - Health, Education, and Welfare - - Welfare and Poverty

References listed on IDEAS
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.:

  1. James Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," NBER Working Papers 9002, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Baker, George P, 1992. "Incentive Contracts and Performance Measurement," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 598-614, June. [Downloadable!] (restricted)
  3. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March. [Downloadable!] (restricted)
  4. Croxson, B. & Propper, C. & Perkins, A., 2001. "Do doctors respond to financial incentives? UK family doctors and the GP fundholder scheme," Journal of Public Economics, Elsevier, vol. 79(2), pages 375-398, February. [Downloadable!] (restricted)
  5. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December. [Downloadable!] (restricted)
    Other versions:
  6. Haubrich, Joseph G, 1994. "Risk Aversion, Performance Pay, and the Principal-Agent Problem," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 258-76, April. [Downloadable!] (restricted)
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  7. 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. [Downloadable!] (restricted)
  8. Lawrence M. Kahn & Peter D. Sherer, 1990. "Contingent pay and managerial performance," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 43(3), pages 107-120, February.
  9. Gerald Marschke, . "An Empirical Investigation of Gaming Responses to Performance Incentives," Discussion Papers 00-12, State University of New York at Albany, Department of Economics. [Downloadable!]
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  10. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  11. 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. [Downloadable!] (restricted)
  12. Baker, G.P. & Jensen, M.C. & Murphy, K.J., 1988. "Compensation And Incentives: Practice Vs. Theory," Papers 88-05, Rochester, Business - Managerial Economics Research Center.
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  13. Garen, John E, 1994. "Executive Compensation and Principal-Agent Theory," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1175-99, December. [Downloadable!] (restricted)
  14. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March. [Downloadable!] (restricted)
  15. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-64, April. [Downloadable!] (restricted)
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  16. 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, vol. 13(1), pages 147-68, April.
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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.)

  1. Gerald Marschke & Pascal Courty, . "The Challenge of Measuring Productivity: A Case Study of Performance Measurement in a Job Training Program," Discussion Papers 02-08, State University of New York at Albany, Department of Economics. [Downloadable!]
  2. Gerald Marschke & P. Courty, 2000. "An Empirical Investigation of Gaming Responses to Performance Incentives," Discussion Papers 00-12, University at Albany, SUNY, Department of Economics. [Downloadable!]
    Other versions:
  3. Courty, Pascal & Marschke, Gerald, 2004. "A General Test of Gaming," CEPR Discussion Papers 4514, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
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This page was last updated on 2008-7-28.

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