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Curbing cream-skimming: Evidence on enrolment incentives

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  • Pascal Courty
  • Do Han Kim
  • Gerald Marschke1

Abstract

Using data from a large, U.S. federal job training program, we investigate whether enrolment incentives that exogenously vary the ‘shadow prices’ for serving different demographic subgroups of clients influence case workers’ intake decisions. We show that case workers enroll more clients from subgroups whose shadow prices increase but select at the margin weaker-performing members from those subgroups. We conclude that enrolment incentives curb cream-skimming across subgroups leaving a residual potential for cream-skimming within a subgroup.

Suggested Citation

  • Pascal Courty & Do Han Kim & Gerald Marschke1, 2009. "Curbing cream-skimming: Evidence on enrolment incentives," Economics Working Papers ECO2009/03, European University Institute.
  • Handle: RePEc:eui:euiwps:eco2009/03
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    References listed on IDEAS

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    1. Cragg, Michael, 1997. "Performance Incentives in the Public Sector: Evidence from the Job Training Partnership Act," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(1), pages 147-168, April.
    2. Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(3), pages 843-877.
    3. James J. Heckman & Carolyn J. Heinrich & Pascal Courty & Gerald Marschke & Jeffrey Smith (ed.), 2011. "The Performance of Performance Standards," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number tpps, November.
    4. James J. Heckman & Jeffrey A. Smith, 2004. "The Determinants of Participation in a Social Program: Evidence from a Prototypical Job Training Program," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 243-298, April.
    5. Burgess, Simon & Propper, Carol & Ratto, Marisa & Tominey, Emma, 2003. "Incentives in the Public Sector: Some Preliminary Evidence from a UK Government Agency," CEPR Discussion Papers 4010, C.E.P.R. Discussion Papers.
    6. Iezzoni, L.I. & Ash, A.S. & Shwartz, M. & Daley, J. & Hughes, J.S. & Mackieman, Y.D., 1996. "Judging hospitals by severity-adjusted mortality rates: The influence of the severity-adjustment method," American Journal of Public Health, American Public Health Association, vol. 86(10), pages 1379-1387.
    7. 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.
    8. Jacob, Brian A., 2005. "Accountability, incentives and behavior: the impact of high-stakes testing in the Chicago Public Schools," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 761-796, June.
    9. David Dranove & Daniel Kessler & Mark McClellan & Mark Satterthwaite, 2003. "Is More Information Better? The Effects of "Report Cards" on Health Care Providers," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 555-588, June.
    10. Kathryn H. Anderson & Richard V. Burkhauser & Jennie E. Raymond, 1993. "The Effect of Creaming on Placement Rates under the Job Training Partnership Act," ILR Review, Cornell University, ILR School, vol. 46(4), pages 613-624, July.
    11. Ladd, Helen F., 1999. "The Dallas school accountability and incentive program: an evaluation of its impacts on student outcomes," Economics of Education Review, Elsevier, vol. 18(1), pages 1-16, February.
    12. 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.
    13. Buchner, Florian & Wasem, Jurgen, 2003. "Needs for further improvement: risk adjustment in the German health insurance system," Health Policy, 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. Boockmann Bernhard & Brändle Tobias, 2019. "Coaching, Counseling, Case-Working: Do They Help the Older Unemployed Out of Benefit Receipt and Back Into the Labor Market?," German Economic Review, De Gruyter, vol. 20(4), pages 436-468, December.
    3. Homrighausen, Pia, 2014. "Differential pricing and private provider performance," IAB-Discussion Paper 201425, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Michael Olejniczak & Dirk Salmon & Wenzel Matiaske & Simon Fietze, 2014. "Arbeitsbedingungen in Jobcentern - Gemeinsame Einrichtungen nach § 44b SGB II Mitarbeiterbefragung zum Arbeitsumfeld, psychischer Belastung und Arbeitszufriedenheit," Report 028, Werkstatt für Organisations- und Personalforschung.
    5. 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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    More about this item

    Keywords

    Performance measurement; cream-skimming; enrolment incentives; bureaucrat behavior; public organizations;
    All these keywords.

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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