Working Paper: NBER ID: w21302
Authors: Renfu Luo; Grant Miller; Scott Rozelle; Sean Sylvia; Marcos Verahernndez
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.
Keywords: performance pay; public service delivery; managerial incentives; nutrition programs; China
JEL Codes: C93; H40; I12; M52; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| large performance incentives (J33) | reduce anemia rates (O15) |
| large performance incentives (J33) | increase hemoglobin levels (I19) |
| small performance incentives (M52) | no significant impact on anemia reduction (F69) |
| large block grant (H77) | reduce anemia rates (O15) |
| unrestricted grants (H77) | crowd out effectiveness of larger performance incentives (D29) |