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Transparency, Recruitment and Retention in the Public Sector

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  • Clare Leaver
  • Gian Luigi Albano
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    Abstract

    This paper argues that government should pay greater heed to recruitment and retention when designing performance measurement systems for bureaucracies. In the face of pervasive rigidities in public sector pay, internal performance measurement rewards quitters and scars stayers and therefore makes it difficult to recruit and retain. Full and immediate publication of performance minimizes the cost of initial recruitment but entails retaining and paying rents to poor performers. This is optimal only if skill differences are low and the value of public production is moderate: high enough to warrant recruitment but not so high that good performers are retained. Human capital objectives are typically better met by abstaining from performance measurement altogether or `stage-managing` its publication, suggesting that the current emphasis on incentives and accountability may be misplaced.

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    Bibliographic Info

    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 219.

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    Date of creation: 01 Dec 2004
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    Handle: RePEc:oxf:wpaper:219

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    Related research

    Keywords: Performance Measurement; Disclosure; Information Management; Sorting; Wage Compression; Public Sector;

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    References

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    1. Gibbons, Robert & Waldman, Michael, 1999. "Careers in organizations: Theory and evidence," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 36, pages 2373-2437 Elsevier.
    2. McLaughlin, Kenneth J, 1990. "General Productivity Growth in a Theory of Quits and Layoffs," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 75-98, January.
    3. repec:rus:hseeco:122160 is not listed on IDEAS
    4. Calzolari, Giacomo & Pavan, Alessandro, 2006. "On the optimality of privacy in sequential contracting," Journal of Economic Theory, Elsevier, vol. 130(1), pages 168-204, September.
    5. James M. Poterba & Kim S. Rueben, 1994. "The Distribution of Public Sector Wage Premia: New Evidence Using Quantile Regression Methods," NBER Working Papers 4734, National Bureau of Economic Research, Inc.
    6. Richard Disney & Amanda Gosling, 1998. "Does it pay to work in the public sector?," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 347-374, November.
    7. Carol Propper & Deborah Wilson, 2003. "The Use and Usefulness of Performance Measures in the Public Sector," The Centre for Market and Public Organisation 03/073, Department of Economics, University of Bristol, UK.
    8. Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09.
    9. Thomas J. Kane & Douglas O. Staiger, 2002. "The Promise and Pitfalls of Using Imprecise School Accountability Measures," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 91-114, Fall.
    10. Florian Ederer, 2010. "Feedback and Motivation in Dynamic Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(3), pages 733-769, 09.
    11. Lawrence F. Katz & Alan B. Krueger, 1991. "Changes in the Structure of Wages in the Public and Private Sectors," NBER Working Papers 3667, National Bureau of Economic Research, Inc.
    12. Mueller, Richard E., 1998. "Public-private sector wage differentials in Canada: evidence from quantile regressions," Economics Letters, Elsevier, vol. 60(2), pages 229-235, August.
    13. Arijit Mukherjee, 2008. "Career Concerns, Matching, And Optimal Disclosure Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1211-1250, November.
    14. Stinebrickner, Todd R, 2001. "A Dynamic Model of Teacher Labor Supply," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 196-230, January.
    15. James Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," NBER Working Papers 9002, National Bureau of Economic Research, Inc.
    16. repec:fth:prinin:282 is not listed on IDEAS
    17. Deborah Wilson & Bronwyn Croxson & Adele Atkinson, 2004. "“What Gets Measured Gets Done”: Headteachers’ Responses to the English Secondary School," The Centre for Market and Public Organisation 04/107, Department of Economics, University of Bristol, UK.
    18. George J. Borjas, 2002. "The Wage Structure and the Sorting of Workers into the Public Sector," NBER Working Papers 9313, National Bureau of Economic Research, Inc.
    19. Courty, Pascal & Marschke, Gerald, 1997. "Measuring Government Performance: Lessons from a Federal Job-Training Program," American Economic Review, American Economic Association, vol. 87(2), pages 383-88, May.
    20. Caroline M. Hoxby & Andrew Leigh, 2004. "Pulled Away or Pushed Out? Explaining the Decline of Teacher Aptitude in the United States," American Economic Review, American Economic Association, vol. 94(2), pages 236-240, May.
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    Cited by:
    1. Alexander K. Koch & Eloïc Peyrache, 2008. "Aligning Ambition and Incentives," Economics Working Papers 2008-16, School of Economics and Management, University of Aarhus.
    2. Gian Luigi Albano & Clare Leaver, 2005. "Transparency, Recuitment and Retention in the Public Sector," The Centre for Market and Public Organisation 05/132, Department of Economics, University of Bristol, UK.

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