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Making Moves Matter: Experimental Evidence on Incentivizing Bureaucrats through Performance-Based Postings

Author

Listed:
  • Adnan Q. Khan
  • Asim Ijaz Khwaja
  • Benjamin A. Olken

Abstract

Bureaucracies often post staff to better or worse locations, ostensibly to provide incentives. Yet we know little about whether this works, with heterogeneity in preferences over postings impacting effectiveness. We propose a performance-ranked serial dictatorship mechanism, whereby bureaucrats sequentially choose desired locations in order of performance. We evaluate this using a two-year field experiment with 525 property tax inspectors in Pakistan. The mechanism increases annual tax revenue growth by 30–41 percent. Inspectors that our model predicts face high equilibrium incentives under the scheme indeed increase performance more. Our results highlight the potential of periodic merit-based postings in enhancing bureaucratic performance.

Suggested Citation

  • Adnan Q. Khan & Asim Ijaz Khwaja & Benjamin A. Olken, 2019. "Making Moves Matter: Experimental Evidence on Incentivizing Bureaucrats through Performance-Based Postings," American Economic Review, American Economic Association, vol. 109(1), pages 237-270, January.
    • Handle: RePEc:aea:aecrev:v:109:y:2019:i:1:p:237-70
    Note: DOI: 10.1257/aer.20180277
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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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