The Performance of Performance Standards

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.