Public Service Quality Under Civil Service Versus Fixed-term Employment: Evidence from Physician Supply of Primary Care

Abstract: We compare the quality of primary care provided by physicians employed as civil servants with physicians hired on fixed-term contracts in China, where facilities employ physicians through both mechanisms. Using data from interactions with mystery patients, we find that physicians employed on fixed-term contracts substantially outperform civil service physicians despite having worse qualifications. This difference remains large after controlling for measures of physician disease-specific competence, intrinsic motivation, and other physician and clinic characteristics. Despite the potential for stronger incentives to generate clinic revenue, we also find no evidence that fixed-term physicians increase unnecessary treatments relative to civil service physicians.