Volume 37, Number 4 (Fall) 2002
Heckman, James J., Carolyn Heinrich, and Jeffrey Smith. 2002. "The Performance of Performance Standards." Journal of Human Resources 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.
James J. Heckman is the Henry Schultz Distinguished Service Professor of Economics at the University of Chicago and a senior fellow of the American Bar Foundation. Carolyn Heinrich is an assistant professor of public policy at the University of North Carolina, Chapel Hill. Jeffrey Smith is an associate professor of economics at the University of Maryland. This research was supported by grants from the American Bar Foundation, the National Science Foundation (SBR-93-4II5), the Russell Sage Foundation, the Social Science and Humanities Research Council of Canada, and the W. E. Upjohn Institute for Employment Research. The authors thank Karen Conneely, Miana Plesca, Carla VanBeselaere, and Alex Whalley for excellent research assistance. They thank Eric Hanushek for helpful comments. This essay is based in part on research reported in a forthcoming monograph edited by James Heckman (2003). The data used in this article can be obtained beginning February 2003 through January 2006 from Jeffrey Smith, Department of Economics, University of Maryland, 3105 Tydings Hall, College Park, MD 20742.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X