Working paper 99/015 - Abstract

The Use of Incentive Schemes in the Public and Private Sectors: Evidence from British Establishments

Simon Burgess and Paul Metcalfe

This paper investigates the use of incentive schemes in the public and private sectors in Britain, using a large representative cross-sectional survey. We confirm that incentive schemes are far less widespread in the public sector than the private sector. We ask whether this is optimal or whether the public sector is run inefficiently. Our approach exploits a three-dimensional cut through the data, looking across sector, occupation and type of scheme. Our findings support for the importance of measurability and multi-tasking. Our results also suggest that it is difficult to rationalise the low incentivisation of the public sector as optimal.

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