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Curbing Cream-Skimming: Evidence on Enrolment Incentives

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Author Info
Courty, Pascal () (European University Institute)
Kim, Do Han () (State University of New York, Albany)
Marschke, Gerald () (Harvard University)

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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.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3909.

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Length: 50 pages
Date of creation: Dec 2008
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Handle: RePEc:iza:izadps:dp3909

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Related research
Keywords: performance measurement; cream-skimming; enrolment incentives; bureaucrat behavior; public organizations;

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Find related papers by JEL classification:
H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. James Heckman & Carolyn Heinrich & Jeffrey Smith, 2002. "The Performance of Performance Standards," NBER Working Papers 9002, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Brian A. Jacob & Steven D. Levitt, 2003. "Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating," NBER Working Papers 9413, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. James J. Heckman & Jeffrey A. Smith & Christopher Taber, 1996. "What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance into the JTPA Program," NBER Working Papers 5535, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Cragg, Michael, 1997. "Performance Incentives in the Public Sector: Evidence from the Job Training Partnership Act," Journal of Law, Economics and Organization, Oxford University Press, vol. 13(1), pages 147-68, April.
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