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Can Bureaucrats Really Be Paid Like CEOs? School Administrator Incentives for Anemia Reduction in Rural China

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Listed:
  • Renfu Luo
  • Grant Miller
  • Scott Rozelle
  • Sean Sylvia
  • Marcos Vera-Hernández

Abstract

A large literature examines performance pay for managers in the private sector, but little is known about performance pay for managers in public sector bureaucracies. In this paper, we study performance incentives rewarding school administrators for reducing anemia among their students. Randomly assigning 170 schools to three performance incentive levels and two orthogonal sizes of unconditional grants, we analyze performance pay and its complementarity with discretionary resources. We find that both large incentives and larger unconditional grants reduced anemia substantially, but incentives were more cost-effective. Performance incentives led administrators to innovate by working with parents, mitigating potentially offsetting compensatory behavior among households. Strikingly, we also find that larger unconditional grants completely crowded-out the effect of incentives. Our findings suggest that performance incentives can be effective in bureaucratic environments – but also that discretionary resources can fully crowd-out their effect.

Suggested Citation

  • Renfu Luo & Grant Miller & Scott Rozelle & Sean Sylvia & Marcos Vera-Hernández, 2015. "Can Bureaucrats Really Be Paid Like CEOs? School Administrator Incentives for Anemia Reduction in Rural China," NBER Working Papers 21302, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21302
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    1. repec:eee:pubeco:v:152:y:2017:i:c:p:47-54 is not listed on IDEAS
    2. Singh, Prakarsh & Masters, William A., 2017. "Impact of caregiver incentives on child health: Evidence from an experiment with Anganwadi workers in India," Journal of Health Economics, Elsevier, vol. 55(C), pages 219-231.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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