The impact of collective performance-related pay on street-level bureaucrats’ performance and clients’ outcomes

How does collective performance-related pay influence street-level bureaucrats’ job performance in public service settings? What is the magnitude of this effect? How do such incentive systems ultimately impact clients’ outcomes? To address these questions in a natural work environment, we analyze a dataset of 35,635 elective surgical procedures conducted in 23 public hospitals in Israel during the 2018–2019 fiscal years, where performance-related pay is implemented at the collective, hospital-level rather than the individual level. Overall, the findings support our hypothesis that collective performance-related pay improves SLBs’ performance. For client outcomes (LOS), the evidence is heterogeneous: the pooled nonparametric comparison shows no robust difference, while the causal model detects a small average signal, and hospital-level patterns vary—suggesting context-dependent effects. By drawing on large-scale administrative data from an actual policy implementation, this study extends prior research that has largely focused on individual-based incentives in experimental or highly stylized settings and contributes to the street-level bureaucracy and performance management literature by empirically distinguishing between effects on frontline performance and effects on client outcomes.