It is generally recognized that one of the core problems of public-sector management is how to ensure the quality and productivity of the work done by public-sector employees. This problem has received recent attention with regard to:

· Schoolteachers -- Many researchers and politicians claim that the quality of a teacher is the most important factor in K-12 education. They recommend policies such as pay-for-performance based on student test score growth, and getting rid of teachers with low performance. However, some claim that these efforts are misdirected and are making teaching less attractive as a profession.

· Police officers -- Problems in this field include corruption, racism, excessive violence, and negligence or incompetence in investigating crimes. Some applicants with criminal records have been hired inappropriately, and it is getting harder to find qualified applicants because of the negativity surrounding the job.

· Military leaders and personnel -- Recent news reports reveal that high-ranking military leaders have engaged in corruption, failed to act against sexual harassment in the military, and neglected basic responsibilities for safety and security. Lower-ranking personnel have been accused of crimes on the battlefield or revealing secrets. Health impacts of service, including suicide, have become a major concern. Most recruits are from lower-income communities where other job opportunties are limited.

· Postal workers -- The US Postal Service is now a quasi-governmental agency. It has long been criticized because of the widespread public perception of incompetence and/or laziness among its employees, whether or not that perception is true.

· Social case workers -- There have been many recent examples of failures in areas such as monitoring the safety of foster children, identifying victims of domestic violence, following up on the health and basic needs of senior residents and those with disabilities, and so forth.

These are only examples; the list could go on and on.

Many of these issues arise in the private sector as well, but they seem to be easier to manage because of the profit motive and relative independence from public oversight. In public management, though, the problem of employee performance is absolutely one of the most important issues.

Questions (answer all three):

a) Pick an example of this kind of problem, which may or may not be from the above list. Briefly describe the background of your example: What employees are involved, what are their perceived inefficiencies, and how are they compensated and evaluated? Try to make your description general or generic to a field, and not just the details of a specific agency or news item.

b) Discuss your example in terms of MORAL HAZARD. How does that economic concept help to analyze the problem? What solutions to moral hazard in the private sector might apply to your public-sector example? Be clear about the economic issues in your analysis. Do not just give solutions from public administration without explaining their economic implications in the context of this course.

c) Discuss your example in terms of ADVERSE SELECTION. How does that economic concept help to analyze the problem? What solutions to adverse selection in the private sector might apply to your public-sector example? Be clear about the economic issues in your analysis. Do not just give solutions from public administration without explaining their economic implications in the context of this course.