Incentives in the Public Sector: Evidence from a Government Agency

25 Pages Posted: 25 Oct 2017

See all articles by Simon M. Burgess

Simon M. Burgess

University of Bristol - Department of Economics; University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Carol Propper

Imperial College London Business School; Centre for Economic Policy Research (CEPR); University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Marisa Ratto

Université Paris-Dauphine, PSL Research University

Emma Tominey

University of York - Department of Economics and Related Studies; IZA Institute of Labor Economics

Multiple version iconThere are 3 versions of this paper

Date Written: October 2017

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.

Suggested Citation

Burgess, Simon and Propper, Carol and Ratto, Marisa and Tominey, Emma, Incentives in the Public Sector: Evidence from a Government Agency (October 2017). The Economic Journal, Vol. 127, Issue 605, pp. F117-F141, 2017. Available at SSRN: https://ssrn.com/abstract=3058405 or http://dx.doi.org/10.1111/ecoj.12422

Simon Burgess (Contact Author)

University of Bristol - Department of Economics ( email )

8 Woodland Road
Bristol BS8 ITN
United Kingdom
+44 117 928 8436 (Phone)
+44 117 928 8577 (Fax)

HOME PAGE: http://www.bris.ac.uk/Depts/Economics/department/profiles/burgess.htm

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

12 Priory Road
Bristol BS8 1TN
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Carol Propper

Imperial College London Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

HOME PAGE: http://www.bris.ac.uk/Depts/Economics/department/profiles/propper.htm

Marisa Ratto

Université Paris-Dauphine, PSL Research University ( email )

Place du Maréchal de Lattre de Tassigny
Paris, 75016
France

Emma Tominey

University of York - Department of Economics and Related Studies ( email )

Heslington
York, YO1 5DD
United Kingdom

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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