Bureaucratic Minimal Squawk: Theory and Evidence

Regulators appointed on finite contracts have an incentive to signal their worth to the job market. This paper shows that, if contracts are sufficiently short, this can result in "minimal squawk" behaviour. Regulated firms publicise the quality of unfavourable decisions, aware that regulators then set favourable policies more often to keep their professional reputation intact. Terms of office vary across US states, prompting an empirical test using firm-level data from the regulation of the US electric industry. Consistent with the theory, we find that shorter terms are associated with fewer rate of return reviews and higher residential prices.

Transparency, Recuitment and Retention in the Public Sector

Although performance measurement systems are likely to have significant recruitment and retention consequences these have received much less attention that the individual incentive effects. This paper explores these recruitment and retention consequences in organizations, such as those in the public sector, which are characterized by rigidities in pay. We clarify when performance measurement increases the cost of recruiting and retaining public sector employees and when it does not. Within the same framework, we also show that traditional practices such as tenure based pay and ports of entry can be rationalized as an optimal response to rigidities in pay.performance measurement, disclosure, sorting, wage compression, public sector

Pandering Judges

Tenured public officials such as judges are often thought to be indifferent to theconcerns of the electorate and, as a result, potentially lacking in discipline butunlikely to pander to public opinion. We investigate this proposition empiricallyusing data on promotion decisions taken by senior English judges between 1985 and2005. Throughout this period the popular view was one of ill-disciplined elitism:senior judges were alleged to be favouring candidates from elite backgrounds overtheir equally capable non-elite counterparts. We find no evidence of such illdiscipline;most of the unconditional difference in promotion prospects between thetwo groups can simply be explained by differences in promotion-relevantcharacteristics. However, exploiting an unexpected proposal to remove control overpromotions from the judiciary, we do find evidence of pandering. When faced by theprospect of losing autonomy, senior judges began to favour non-elite candidates, aswell as candidates who were unconnected to members of the promotion committee.Our finding that tenured public officials can display both the upsides and downsidesof electoral accountability has implications for the literature on political agency, aswell as recent constitutional reforms.Electoral Accountability, Judges, Promotion Decisions

Measuring and explaining management in schools: new approaches using public data

Why do some students learn more in some schools than others? One consideration receiving growing attention is school management. To study this, researchers need to be able to measure school management accurately and cheaply at scale, and also explain any observed relationship between school management and student learning. This paper introduces a new approach to measurement using existing public data, and applies it to build a management index covering 15,000 schools across 65 countries, and another index covering nearly all public schools in Brazil. Both indices show a strong, positive relationship between school management and student learning. The paper then develops a simple model that formalizes the intuition that strong management practices might be driving learning gains via incentive and selection effects among teachers, students and parents. The paper shows that the predictions of this model hold in public data for Latin America, and draws out implications for policy

Information and Human Capital Managment

An increasingly important organisational design problem for many firms is to recoup general human capital rents while maintaining attractive career prospects for workers. We explore the role of information management in this context. In our model, an information management policy determines the statistic of worker performance that will be available to outside recruiters. Choosing different statistics affects the extent of regression to the mean which, we show, in turn affects the incidence of adverse selection among retained and released workers. Using this observation, we detail how optimal information management policies vary across firms with different human capital management priorities. This view of human capital management via information management has strong implications for labour market outcomes. We discuss the impact on average wages, wage inequality, wage skewness and labour turnover rates

Recruitment, effort, and retention effects of performance contracts for civil servants: Experimental evidence from Rwandan primary schools

This paper reports on a two-tiered experiment designed to separately identify the selection and effort margins of pay-for-performance (P4P). At the recruitment stage, teacher labor markets were randomly assigned to a 'pay-for-percentile' or fixed-wage contract. Once recruits were placed, an unexpected, incentive- compatible, school-level re-randomization was performed, so that some teachers who applied for a fixed-wage contract ended up being paid by P4P, and vice versa. By the second year of the study, the within-year effort effect of P4P was 0.16 standard deviations of pupil learning, with the total effect rising to 0.20 standard deviations after allowing for selection

Information and Human Capital Managment

An increasingly important organisational design problem for many firms is to recoup general human capital rents while maintaining attractive career prospects for workers. We explore the role of information management in this context. In our model, an information management policy determines the statistic of worker performance that will be available to outside recruiters. Choosing different statistics affects the extent of regression to the mean which, we show, in turn affects the incidence of adverse selection among retained and released workers. Using this observation, we detail how optimal information management policies vary across firms with different human capital management priorities. This view of human capital management via information management has strong implications for labour market outcomes. We discuss the impact on average wages, wage inequality, wage skewness and labour turnover rates

Designing and implementing experiments within local bureaucratic systems: a cautionary tale from an educator incentive program

Partnering with governments to co-design pilot interventions and embed them in local bureaucratic systems is increasingly seen as ‘best practice’ on grounds of scalability and sustainability. This paper reports on a pilot program that was co-designed with, and embedded within, the Elementary and Secondary Education (E&SE) Department in Pakistan's Khyber Pakhtunkhwa province that offers a cautionary tale. The over-arching desire to work within existing bureaucratic systems, while laudable, constrained the design of the randomized controlled trial. This paper presents findings on some of the institutional factors which resulted in failed implementation of the RCT and a lost opportunity to learn about the efficacy of key design features. The paper briefly outlines the design of the pilot—promotion-based incentives for educators—and summarises the largely null results. It then turns to implementation, discussing what went wrong, how this was uncovered, and lessons learned for co-designing and embedding future pilot studies with(in) government

Pay for locally monitored performance?:A welfare analysis for teacher attendance in Ugandan primary schools

To achieve the twin objectives of incentivizing agent performance and providing information for planning purposes, public sector organizations often rely on reports by local monitors that are costly to verify. Received wisdom has it that attaching financial incentives to these reports will result in collusion, and undermine both objectives. Simple bargaining logic, however, suggests the reverse: pay for locally monitored performance could incentivize desired behavior and improve information. To investigate this issue, we conducted a randomized controlled trial in Ugandan primary schools that explored how incentives for teachers could be designed when based on local monitoring by head teachers. Our experiment randomly varied whether head teachers' reports of teacher attendance were tied to teacher bonus payments or not. We find that local monitoring on its own is ineffective at improving teacher attendance. However, combining local monitoring with financial incentives leads to both an increase in teacher attendance (by 8 percentage points) and an improvement in the quality of information. We also observe substantial gains in pupil attainment, driven primarily by a reduction in dropouts. By placing a financial value on these enrollment gains, we demonstrate that pay for locally monitored performance passes both welfare and fiscal sustainability tests