DP7121 Curbing Cream-Skimming: Evidence on Enrolment Incentives

Author(s): Pascal Courty, Do Han Kim, Gerald Marschke
Publication Date: January 2009
Keyword(s): bureaucrat behavior, cream-skimming, enrolment incentives, Performance measurement, public organizations
JEL(s): H72, J33, L14
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=7121

Using data from a large, U.S. federal job training program, we investigate whether enrolment incentives that exogenously vary the ‘shadow prices’ for serving different demographic subgroups of clients influence case workers’ intake decisions. We show that case workers enroll more clients from subgroups whose shadow prices increase but select at the margin weaker-performing members from those subgroups. We conclude that enrolment incentives curb cream-skimming across subgroups leaving a residual potential for cream-skimming within a subgroup.