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Can Bureaucrats Really Be Paid Like Ceos? Substitution Between Incentives and Resources Among School Administrators in China

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  • Renfu Luo
  • Grant Miller
  • Scott Rozelle
  • Sean Sylvia
  • Marcos Vera-Hernández

Abstract

Unlike performance incentives for private sector managers, little is known about performance incentives for managers in public sector bureaucracies. Through a randomized trial in rural China, we study performance incentives rewarding school administrators for reducing student anemia—as well as complementarity between incentives and orthogonally assigned discretionary resources. Large (but not small) incentives and unrestricted grants both reduced anemia, but incentives were more cost-effective. Although unrestricted grants and small incentives do not interact, grants fully crowd-out the effect of larger incentives. Our findings suggest that performance incentives can be effective in bureaucratic environments, but they are not complementary to discretionary resources.

Suggested Citation

  • Renfu Luo & Grant Miller & Scott Rozelle & Sean Sylvia & Marcos Vera-Hernández, 2020. "Can Bureaucrats Really Be Paid Like Ceos? Substitution Between Incentives and Resources Among School Administrators in China," Journal of the European Economic Association, European Economic Association, vol. 18(1), pages 165-201.
    • Handle: RePEc:oup:jeurec:v:18:y:2020:i:1:p:165-201.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvy047
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    Cited by:

    1. In'acio B'o & Li Chen, 2021. "Designing Heaven's Will: The job assignment in the Chinese imperial civil service," Papers 2105.02457, arXiv.org, revised Sep 2021.
    2. Ding, Hui & Chen, Yiwei & Yu, Min & Zhong, Jieming & Hu, Ruying & Chen, Xiangyu & Wang, Chunmei & Xie, Kaixu & Eggleston, Karen, 2021. "The Effects of Chronic Disease Management in Primary Health Care: Evidence from Rural China," Journal of Health Economics, Elsevier, vol. 80(C).

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