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

Overview

Journal J Eur Econ Assoc

Date 2020 Mar 13

PMID 32161517

Authors

Renfu Luo

Grant Miller

Scott Rozelle

Sean Sylvia

Marcos Vera-Hernandez

Affiliations

Soon will be listed here.

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.

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