Organizational incentives and bureaucratic behavior: Evidence from a federal bureaucracy

This work investigates the incentive policies for bureaucrats in the large government welfare program operating under the Job Training Partnership Act (JTPA) of 1982. In particular, this work (1) characterizes the organizational incentives facing JTPA bureaucrats, and (2) describes the influence of these incentives on aspects of bureaucratic behavior.;This work makes three major contributions. First, this work assembles and documents the incentives facing JTPA bureaucrats. JTPA delegates important resource allocation decisions to local-level bureaucrats while providing accountability and motivating performance through a set of financially-backed performance measures. This detailed description of a real-life incentive system is in its own right an important contribution to the notoriously data-poor literature on incentives.;Second by establishing a relationship between organizational behavior and incentives this work provides rare evidence that incentives in organizations matter. By relating incentives and measured outputs of the organization this work not only shows that incentives affect how resources are allocated within the organization, but it also shows the consequences of incentives for the efficiency of the organization. This ability to relate at the agent-level precisely-defined incentives to precisely-measured output is rare in empirical studies of incentives.;Third the findings described here are some of the strongest evidence yet that JTPA bureaucrats respond to incentives, and that incentives can be used to shape behavior in government bureaucracy. For bureaucracies with well-defined goals, this responsiveness suggests that if policy-makers can design measurable performance objectives aligned with these goals, we can expect a higher level of productivity in the provision of public services. Nevertheless, the finding reported here that training centers "game" the performance incentives cautions that objectives that are not well-aligned with the goals may distort the productivity of bureaucrats.