The Effectiveness of Monetary and Promotion Rewards in the Public Sector and the Moderating Effect of PSM (PSM-Reward Fit or PSM Crowding Out): A Survey Experiment

To what extent does public service motivation (PSM) affect how monetary rewards and promotion opportunities motivate government officials? This study offers an answer to this question through a survey experiment conducted with a sample of city government officials in Florida. The experimental results demonstrate that both monetary and promotion reward treatments positively motivate officials with low PSM. However, as the level of PSM increases, the positive treatment effect of the monetary reward decreases and converges on 0. Conversely, the positive effect of the promotion opportunity treatment not only decreases but becomes negative, indicating that PSM crowding out is taking place.