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Incentives in the Public Sector: Evidence from a Government Agency

SIMON M. BURGESS · Carol Propper · Marisa Ratto · Emma Tominey

87 citations0/0 files storedThe Economic Journal

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Public Policy and Administration Research Accounting and Organizational Management Experimental Behavioral Economics Studies

Abstract

We study the impact of team‐based performance pay in a major UK government agency, the public employment service. The scheme covered quantity and quality targets, measured with varying degrees of precision. We use unique data from the agency’s performance management system and personnel records, linked to local labour market data. We show that on average the scheme had no significant effect but had a substantial positive effect in small teams, fitting an explanation combining free riding and peer monitoring. The impact was greater on better‐measured quantity outcomes than quality outcomes. The scheme was very cost effective in small offices.

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References

1982Moral Hazard in Teams 1999The Provision of Incentives in Firms 2000Performance Pay and Productivity 1993Reinventing Government 1992Peer Pressure and Partnerships 2005Competition and Incentives with Motivated Agents 2002Incentives and Organizations in the Public Sector: An Interpretative Review 2003Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation

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2009Smarter Task Assignment or Greater Effort: The Impact of Incentives on Team Performance 2018Gaming and strategic opacity in incentive provision 2024Mission Driven Bureaucrats 2020The Role of Monetary Incentives: Bonus and/or Stimulus 2017Impact of caregiver incentives on child health: Evidence from an experiment with Anganwadi workers in India 2020Impact of Financial Incentives and the Role of Information and Communication in Last-Mile Delivery of Textbooks in Zambia

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