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Incentives in the Public Sector: Evidence from a Government Agency

Author

Listed:
  • Simon M. Burgess

    (IZA - Institute for the study of labor - Institute for the Study of Labor - IZA)

  • Carol Propper

    (Centre for Health Economics and Policy Innovation - Imperial College London)

  • Marisa Ratto

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

  • Emma Tominey

    (IZA - Institute for the study of labor - Institute for the Study of Labor - IZA)

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

  • Simon M. Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2017. "Incentives in the Public Sector: Evidence from a Government Agency," Post-Print hal-01651132, HAL.
    • Handle: RePEc:hal:journl:hal-01651132
    DOI: 10.1111/ecoj.12422
    Note: View the original document on HAL open archive server: https://hal.science/hal-01651132
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    More about this item

    Keywords

    personnel economics; teams; Incentives; public sector; performance;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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