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How Incentives Increase Inequality

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  • Maya Bacache‐Beauvallet

Abstract

. We determine the optimal level of bonuses in the case of Co‐production between an agent and multiusers. There is Co‐production when the outcome is the result of both the agent's effort and the user's effort and type. Paying bonuses to the agent encourages him to vary his effort according to the user he meets. This variety in the agent's effort results in an increase in inequality. Hence, the optimal level of bonuses is muted when the principal cares about equality among users. This is typically the case in education or health.

Suggested Citation

  • Maya Bacache‐Beauvallet, 2006. "How Incentives Increase Inequality," LABOUR, CEIS, vol. 20(2), pages 383-391, June.
    • Handle: RePEc:bla:labour:v:20:y:2006:i:2:p:383-391
    DOI: 10.1111/j.1467-9914.2006.00342.x
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    1. Thomas J. Kane & Douglas O. Staiger, 2001. "Improving School Accountability Measures," NBER Working Papers 8156, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Filmer,Deon P. & Habyarimana,James Paul & Sabarwal,Shwetlena, 2020. "Teacher Performance-Based Incentives and Learning Inequality," Policy Research Working Paper Series 9382, The World Bank.
    2. Florence Audier & Maya Bacache-Beauvallet, 2007. "Emploi dans la fonction publique et fonctions "d'intérêt public" : Que nous apprennent les comparaisons internationales ?," Post-Print halshs-00177063, HAL.

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