published in: Journal of Human Resources, 2002, 37(4), 778-811
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.
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