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Performance-related Pay in the Public Sector : A Review of Theory and Evidence

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dc.contributor.authorPierskalla, Jan Henryk
dc.contributor.authorHasnain, Zahid
dc.contributor.authorManning, Nick
dc.date.accessioned2012-04-27T07:44:31Z
dc.date.available2012-04-27T07:44:31Z
dc.date.issued2012-04
dc.description.abstractThe objective of this paper is to provide a review of the theoretical and, in particular, empirical literature on performance-related pay in the public sector spanning the fields of public administration, psychology, economics, education, and health with the aim of distilling useful lessons for policy-makers in developing countries. This study to our knowledge is the first that aims to disaggregate the available evidence by: (i) the quality of the empirical study; (ii) the different public sector contexts, in particular the different types of public sector jobs; and (iii) geographical context (developing country or OECD settings). The paper's main findings, based on a comprehensive review of 110 studies of public sector and relevant private sector jobs are as follows. First, we find that overall a majority (65 of 110) of studies find a positive effect of performance-related pay, with higher quality empirical studies (68 of the 110) generally more positive in their findings (46 of the 68). These show that explicit performance standards linked to some form of bonus pay can improve, at times dramatically, desired service outcomes. Second, however, these more rigorous studies are overwhelmingly for jobs where the outputs or outcomes are more readily observable, such as teaching, health care, and revenue collection (66 of the 68). There is insufficient evidence, positive or negative, of the effect of performance-related pay in organizational contexts that that are similar to that of the core civil service, characterized by task complexity and the difficulty of measuring outcomes, to reach a generalized conclusion concerning such reforms. Third, while some of these studies have shown that performance-related pay can work even in the most dysfunctional bureaucracies in developing countries, there are too few cases to draw firm conclusions. Fourth, several observational studies identify problems with unintended consequences and gaming of the incentive scheme, although it is unclear whether the gaming results in an overall decline in productivity compared to the counterfactual. Finally, few studies follow up performance-related pay effects over a long period of time, leaving the possibility that the positive findings may be due to Hawthorne Effects, and that gaming behavior may increase over time as employees become more familiar with the scheme and learn to manipulate it.en
dc.identifierhttp://documents.worldbank.org/curated/en/2012/04/16235004/performance-related-pay-public-sector-review-theory-evidence
dc.identifier.doi10.1596/1813-9450-6043
dc.identifier.urihttps://hdl.handle.net/10986/6046
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper ; No. 6043
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectABSENTEEISM
dc.subjectACHIEVEMENT
dc.subjectADJUSTMENT
dc.subjectADVERSE SELECTION
dc.subjectATTENTION
dc.subjectATTRIBUTION
dc.subjectBARGAINING
dc.subjectBENCHMARK
dc.subjectBORROWING
dc.subjectBUSINESSES
dc.subjectCAPABILITIES
dc.subjectCAREER
dc.subjectCASH FLOWS
dc.subjectCIVIL SERVICE
dc.subjectCOGNITIVE ABILITY
dc.subjectCOLLEGE STUDENTS
dc.subjectCOLLEGES
dc.subjectCOMPETITIVENESS
dc.subjectCONTROL GROUPS
dc.subjectCREATIVITY
dc.subjectDECENTRALIZATION
dc.subjectDEVELOPMENT POLICY
dc.subjectDRIVERS
dc.subjectDROPOUT RATES
dc.subjectECONOMIC THEORIES
dc.subjectECONOMICS
dc.subjectECONOMICS LITERATURE
dc.subjectEMPLOYEE INVOLVEMENT
dc.subjectEMPLOYMENT
dc.subjectEXTERNALITIES
dc.subjectEXTRINSIC INCENTIVES
dc.subjectFINAL OUTCOMES
dc.subjectFUTURE RESEARCH
dc.subjectGENDER
dc.subjectGENDER EQUITY
dc.subjectGENERAL POPULATION
dc.subjectGENERAL PUBLIC
dc.subjectGOVERNMENT EMPLOYEES
dc.subjectHUMAN CAPITAL
dc.subjectHUMAN RESOURCE
dc.subjectIMAGE
dc.subjectINCENTIVE EFFECTS
dc.subjectINCENTIVE PLANS
dc.subjectINCOME
dc.subjectINFERENCE
dc.subjectINNOVATION
dc.subjectINSPECTION
dc.subjectINSPECTIONS
dc.subjectINSTRUCTION
dc.subjectINSURANCE
dc.subjectINSURANCE SYSTEMS
dc.subjectINTRINSIC MOTIVATION
dc.subjectJOB SATISFACTION
dc.subjectJOB SECURITY
dc.subjectKNOWLEDGE WORKERS
dc.subjectLABOR MARKET
dc.subjectLABOR RELATIONS
dc.subjectLABOR SUPPLY
dc.subjectLEARNING
dc.subjectLEARNING OUTCOMES
dc.subjectLITERATURE
dc.subjectLOTTERIES
dc.subjectMANAGERIAL DISCRETION
dc.subjectMANUFACTURING
dc.subjectMATHEMATICS
dc.subjectMENU
dc.subjectMIDDLE INCOME COUNTRIES
dc.subjectMORAL HAZARD
dc.subjectMOTIVATION
dc.subjectNEGATIVE EXTERNALITIES
dc.subjectNETWORKS
dc.subjectOCCUPATIONS
dc.subjectOPEN ACCESS
dc.subjectORGANIZATIONAL GOALS
dc.subjectORGANIZATIONAL MANAGEMENT
dc.subjectOUTPUTS
dc.subjectPAPERS
dc.subjectPERCEPTION
dc.subjectPERFORMANCE MEASURE
dc.subjectPERFORMANCE MEASURES
dc.subjectPERFORMANCE PAY
dc.subjectPILOT PROJECT
dc.subjectPOSITIVE EFFECTS
dc.subjectPRINCIPAL-AGENT RELATIONSHIPS
dc.subjectPRIVATE INFORMATION
dc.subjectPRIVATE SCHOOLS
dc.subjectPRIVATE SECTOR
dc.subjectPRIVATE SECTOR FIRMS
dc.subjectPRODUCTION PROCESS
dc.subjectPRODUCTION PROCESSES
dc.subjectPRODUCTIVITY
dc.subjectPROFESSIONAL STAFF
dc.subjectPROFESSIONAL STANDARDS
dc.subjectPROFIT SHARING
dc.subjectPSYCHOLOGY
dc.subjectPUBLIC ADMINISTRATION
dc.subjectQUALIFIED TEACHERS
dc.subjectRECOGNITION
dc.subjectRESEARCH LITERATURE
dc.subjectRESEARCHERS
dc.subjectRESULT
dc.subjectRESULTS
dc.subjectRETENTION
dc.subjectSAFETY
dc.subjectSCHOOLS
dc.subjectSCIENTISTS
dc.subjectSERVANTS
dc.subjectSIDE EFFECTS
dc.subjectSOCIAL COSTS
dc.subjectSTAFF MORALE
dc.subjectSTAFF SALARIES
dc.subjectSTATISTICAL DATA
dc.subjectSTUDENT GROUPS
dc.subjectSTUDENT LEARNING
dc.subjectSUPERVISION
dc.subjectSUPPLIERS
dc.subjectTARGETS
dc.subjectTEACHER
dc.subjectTEACHERS
dc.subjectTEACHING
dc.subjectTIME FRAME
dc.subjectTIME PERIOD
dc.subjectTRAINING PROGRAMS
dc.subjectTRANSACTION
dc.subjectUNIVERSITY STUDENTS
dc.subjectUSES
dc.subjectWAGES
dc.subjectWEB
dc.subjectWORKER PRODUCTIVITY
dc.titlePerformance-related Pay in the Public Sector : A Review of Theory and Evidenceen
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titlePerformance-Related Pay in the Public Sector: A Review of Theory and Evidence
okr.date.disclosure2012-04-01
okr.date.doiregistration2025-04-10T11:00:47.853132Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2012/04/16235004/performance-related-pay-public-sector-review-theory-evidence
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeEducation
okr.globalpracticeSocial Protection and Labor
okr.globalpracticeTransport and ICT
okr.globalpracticeTrade and Competitiveness
okr.guid666871468176639302
okr.identifier.doi10.1596/1813-9450-6043
okr.identifier.externaldocumentum000158349_20120420134724
okr.identifier.internaldocumentum16235004
okr.identifier.reportWPS6043
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/04/20/000158349_20120420134724/Rendered/PDF/WPS6043.pdfen
okr.topicEducation::Educational Sciences
okr.topicPrivate Sector Development::E-Business
okr.topicSocial Protections and Labor::Labor Policies
okr.topicTertiary Education
okr.topicEconomic Theory and Research
okr.topicMacroeconomics and Economic Growth
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isAuthorOfPublication8440a442-0f2d-5095-a9eb-7c0b9d112d1a
relation.isAuthorOfPublicationed44e1cc-5d51-5fee-8f1b-fa79cffabdb1
relation.isAuthorOfPublication.latestForDiscovery8440a442-0f2d-5095-a9eb-7c0b9d112d1a
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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