NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Performance of Performance Standards

James Heckman, Carolyn Heinrich, Jeffrey Smith

NBER Working Paper No. 9002*
Issued in June 2002
NBER Program(s):   LS    PE

This paper examines the performance of the JTPA performance system, a widely emulated model for inducing efficiency in government organizations. We present a model of how performance incentives may distort bureaucratic decisions. We define cream skimming within the model. Two major empirical findings are (a) that the short run measures used to monitor performance are weakly, and sometimes perversely, related to long run impacts and (b) that the efficiency gains or losses from cream skimming are small. We find evidence that centers respond to performance standards.

*Published: Heckman, James J., Carolyn Heinrich and Jeffrey Smith. "The Performance Of Performance Standards," Journal of Human Resources, 2002, v37(4,Fall), 778-811.

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