Curbing Cream-Skimming: Evidence on Enrollment Incentives

Posted: 22 Dec 2008

See all articles by Pascal Courty

Pascal Courty

University of Victoria; European University Institute - Economics Department (ECO); Centre for Economic Policy Research (CEPR)

Do Han Kim

University at Albany, SUNY

Gerald Marschke

University at Albany - Department of Economics; National Bureau of Economic Research; Institute for the Study of Labor (IZA); Harvard Law School, Labor & Worklife Program

Date Written: December 1, 2008

Abstract

Can enrollment incentives reduce the incidence of cream-skimming in the delivery of public sector services (e.g. education, health, job training)? In the context of a large government job training program, we investigate whether the use of enrollment incentives that set different 'shadow prices' for serving different demographic subgroups of clients, influence case workers' choice of intake population. Exploiting exogenous variation in these shadow prices, we show that training agencies change the composition of their enrollee populations in response to changes in the incentives, increasing the relative fraction of subgroups whose shadow prices increase. We also show that the increase is due to training agencies enrolling at the margin weaker members, in terms of performance, of that subgroup.

Keywords: Performance measurement, cream-skimming, enrolment incentives, bureaucrat behavior, public organizations

JEL Classification: H72, J33, L14

Suggested Citation

Courty, Pascal and Kim, Do Han and Marschke, Gerald R. and Marschke, Gerald R., Curbing Cream-Skimming: Evidence on Enrollment Incentives (December 1, 2008). Available at SSRN: https://ssrn.com/abstract=1319129

Pascal Courty

University of Victoria ( email )

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Do Han Kim

University at Albany, SUNY ( email )

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Gerald R. Marschke (Contact Author)

University at Albany - Department of Economics ( email )

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