Performance Incentives and Organizational Behavior: Evidence from a Federal Bureaucracy

Abstract

This paper examines the e#ects of performance incentives in a federal job training program for the economically disadvantaged. A natural experiment that exogenously varies the incentives that government workers face allows me to identify incentive responses, which I find are consistent with a simple model of organizational behavior. Additionally, I show that the program's incentive designers have di#culty identifying performance measures that are aligned with the program's objectives. I discuss my results in the context of the greater incentive literature (especially the multi-tasking literature), as well as the literature on incentives in job training programs. (JEL J33, J24, D73, I38) Keywords: Performance incentives, performance measurement, multi-tasking, job training programs, government bureaucracy.

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