Selection rates and bureaucratic performance

Abstract

Bureaucratic personnel policy influences agency performance by affecting both the types of bureaucrats who are selected for employment and the actions that bureaucrats take. An effective policy selects intrinsically motivated bureaucrats for promotion or retention and provides incentives for bureaucrats to exert a high level of effort. I investigate a retention and promotion policy used in a number of U.S. government agencies in which only a previously specified percentage of bureaucrats in a cohort are retained after one period. The proportion of bureaucrats retained after a review is referred to as a “selection rate”. Using a formal model, I show that the adoption of a selection rate facilitates the separation of intrinsically motivated and unmotivated bureaucrats where they would otherwise pool, allowing bureaucratic personnel managers to screen out unmotivated bureaucrats. Effective screening by itself, however, is not welfare-enhancing because screening removes unmotivated bureaucrats’ incentives to exert effort. Compared to alternative welfare-reducing screening mechanisms which bring about screening through monitoring or wage policy, selection rates facilitate welfare-enhancing screening by inducing motivated types to exert additional effort in order to distinguish themselves from unmotivated bureaucrats. I find that selection rates are most effective where material or ego rents from government employment are high and where the policy rewards that motivated bureaucrats realize are low. These properties of selection rates explain their adoption in several U.S. government agencies’ personnel systems, most notably the military officer corps.