Effort as Investment: Analyzing the Response to Incentives
Preprint
- 1 May 2007
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
We analyze a model in which incentives in one period on one task can affect output more broadly through learning. If agents can invest in human or organizational capital, then output will increase both before and after short-term incentives. We develop a model of these effects, and then we evaluate its predictions using data from hospitals in Britain during a series of limited-time performance incentives offered by the government. We find empirically that these policies increase performance not only during the incentivized periods but also before and after, matching the predictions of our model. We also examine performance along non-incentivized dimensions of quality of care and find little evidence of classical effort substitution.Keywords
All Related Versions
This publication has 20 references indexed in Scilit:
- Is More Information Better? The Effects of “Report Cards” on Health Care ProvidersJournal of Political Economy, 2003
- Incentives and Organizations in the Public Sector: An Interpretative ReviewThe Journal of Human Resources, 2002
- Pay Enough or Don't Pay at All*The Quarterly Journal of Economics, 2000
- Policy PersistenceAmerican Economic Review, 1999
- Public-Service Motivation: Building Empirical Evidence of Incidence and EffectJournal of Public Administration Research and Theory, 1997
- The Making of Economic PolicyPublished by MIT Press ,1996
- Has China Become Polarized?Chinese Economic Studies, 1996
- Incentive Contracts and Performance MeasurementJournal of Political Economy, 1992
- A Theory of Wage DynamicsThe Review of Economic Studies, 1982
- Effects of externally mediated rewards on intrinsic motivation.Journal of Personality and Social Psychology, 1971