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Curbing Cream-Skimming: Evidence on Enrolment Incentives

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  • Courty, Pascal

    (European University Institute)

  • Kim, Do Han

    (University at Albany, SUNY)

  • Marschke, Gerald

    (University at Albany, SUNY)

Abstract

Can enrolment incentives reduce the incidence of cream-skimming in the delivery of public sector services (e.g. education, health, job training)? In the context of a large government job training program, we investigate whether the use of enrolment incentives that set different 'shadow prices' for serving different demographic subgroups of clients, influence case workers' choice of intake population. Exploiting exogenous variation in these shadow prices, we show that training agencies change the composition of their enrollee populations in response to changes in the incentives, increasing the relative fraction of subgroups whose shadow prices increase. We also show that the increase is due to training agencies enrolling at the margin weaker members, in terms of performance, of that subgroup.

Suggested Citation

  • Courty, Pascal & Kim, Do Han & Marschke, Gerald, 2008. "Curbing Cream-Skimming: Evidence on Enrolment Incentives," IZA Discussion Papers 3909, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3909
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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.
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    6. 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.
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    11. 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.
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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. 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.
    4. 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.
    5. 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].

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    More about this item

    Keywords

    performance measurement; bureaucrat behavior; cream-skimming; public organizations; enrolment incentives;
    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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