Motivation Crowding and the Federal Civil Servant: Evidence from the U.S. Internal Revenue Service

International Public Management Journal, Forthcoming

30 Pages Posted: 16 Nov 2005

See all articles by Anthony M. Bertelli

Anthony M. Bertelli

Pennsylvania State University; Institut Barcelona d'Estudis Internacionals - IBEI


Pay-for-performance reforms create high-powered incentives for civil servants to meet or exceed specified performance objectives as measured by such things as customer satisfaction. Economists and social psychologists have advanced the claim that high-powered incentives for performance may empirically lessen the effect of civil servants' intrinsic motivation toward achieving agency goals (motivation can be crowded-out). Nonetheless, well-designed pay-for-performance incentives may crowd-in intrinsic motivation. A number of federal agencies and subagencies have undergone personnel management reforms that raise the specter of this pattern of motivation crowding. Does it happen? Is intrinsic motivation crowded-in or crowded-out? This paper employs item response theory to create measurement models for the estimation a latent trait of intrinsic motivation for employees of the Internal Revenue Service (IRS) and Office of the Comptroller of the Currency (OCC) using data from the 2002 Federal Human Capital Survey. The IRS implemented a paybanding system that imposed high-powered performance incentives on supervisors, but not on non-supervisory personnel. Results suggest that the IRS reward structure crowded-in intrinsic motivation at the lowest levels intrinsic motivation, but that at the highest levels of motivation intrinsic motivation is crowded-out.

Keywords: motivation crowding, pay-for-performance, public management

JEL Classification: C42, M54, M40, M46, M48

Suggested Citation

Bertelli, Anthony M., Motivation Crowding and the Federal Civil Servant: Evidence from the U.S. Internal Revenue Service. International Public Management Journal, Forthcoming, Available at SSRN:

Anthony M. Bertelli (Contact Author)

Pennsylvania State University ( email )

University Park, PA 16802-3306
United States


Institut Barcelona d'Estudis Internacionals - IBEI ( email )

Ramon Trias Fargas 25-27
Barcelona, Barcelona 08005

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