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Can Bureaucrats Really Be Paid Like CEOs? School Administrator Incentives for Anemia Reduction in Rural China

Renfu Luo, Grant Miller, Scott Rozelle, Sean Sylvia, Marcos Vera-Hernández

NBER Working Paper No. 21302
Issued in June 2015, Revised in August 2018
NBER Program(s):Children, Development Economics, Economics of Education, Health Economics

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.

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Document Object Identifier (DOI): 10.3386/w21302

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