Curbing Cream-Skimming: Evidence on Enrolment Incentives

50 Pages Posted: 19 Jan 2009

See all articles by Pascal Courty

Pascal Courty

University of Victoria; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Do Han Kim

University at Albany, SUNY

Gerald Marschke

University at Albany - Department of Economics; National Bureau of Economic Research; Institute for the Study of Labor (IZA); Harvard Law School, Labor & Worklife Program

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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.

Keywords: performance measurement, cream-skimming, enrolment incentives, bureaucrat behavior, public organizations

JEL Classification: H72, J33, L14

Suggested Citation

Courty, Pascal and Kim, Do Han and Marschke, Gerald R. and Marschke, Gerald R., Curbing Cream-Skimming: Evidence on Enrolment Incentives. IZA Discussion Paper No. 3909, Available at SSRN: https://ssrn.com/abstract=1329547 or http://dx.doi.org/10.2139/ssrn.1329547

Pascal Courty (Contact Author)

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