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on Human Capital and Human Resource Management |
| By: | Matthias Fahn; Giorgio Zanarone |
| Abstract: | This paper studies how pay transparency affects organizations that reward employees based on their efforts (i.e., using “subjective performance evaluation”). First, we show that transparency triggers social comparisons that require the organization to pay its employees an “envy premium”. This premium reduces the value of the employment relationship to the organization, and thus its incentive to pay subjective bonuses to the hard-working employees. To restore credibility of its incentive system, a transparent organization must therefore reduce the weight of bonuses, and increase the weight of fixed salaries, in the employees’ compensation, relative to organizations that operate in a more conventional “pay secrecy” regime. Second, we show that transparency enables the employees to collectively sanction the organization for reneging on subjective incentives. Collective enforcement allows the transparent organization to use strong employment relationships to “cross-subsidize” weak ones, achieving a more balanced allocation of effort than under pay secrecy. We discuss testable implications of our model for compensation design, the choice between transparency and secrecy regimes, and organizational responses to pay transparency laws. |
| Keywords: | Social Comparisons, Secrecy, Transparency, Relational Contracts, Incentives. |
| JEL: | D03 D23 M52 M54 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2021-02&r=all |
| By: | Supreet Kaur; Sendhil Mullainathan; Suanna Oh; Frank Schilbach |
| Abstract: | We test whether increasing cash-on-hand raises the productivity of poor workers. Our motivation is psychological. Concerns about money can create mental burdens such as worry, stress, or sadness. These in turn could interfere with the ability to work effectively. We empirically test for this possibility using a field experiment with piece-rate manufacturing workers in India. We randomize the timing of income receipt, so that on a given day some workers have more cash-on-hand than others. This manipulation holds constant wages and piece rates, as well as human and physical capital. On cash-rich days, average productivity increases by 0.11 standard deviations (6.2%); this effect is concentrated among relatively poorer workers. Mistakes also decline on these days --- an effect that is again concentrated among poorer workers. Having more cash-on-hand thus enables workers to work faster while making fewer errors, suggesting improved cognition. We argue that mechanisms such as gift exchange, trust, and nutrition cannot account for our findings. Instead, our results suggest a range of psychological mechanisms wherein alleviating financial concerns allows workers to be more attentive and productive at work. |
| JEL: | D03 D14 D31 J24 O1 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28338&r=all |
| By: | Yana Gallen (University of Chicago and IZA); Melanie Wasserman (UCLA and CEPR) |
| Abstract: | This paper estimates gender differences in access to informal information regarding the labor market. We conduct a large-scale field experiment in which real college students seek information from 10,000 working professionals about various career paths, and we randomize whether a professional receives a message from a male or a female student. We focus the experimental design and analysis on two career attributes that prior research has shown to differentially affect the labor market choices of women: the extent to which a career accommodates work/life balance and has a competitive culture. When students ask broadly for information about a career, we find that female students receive substantially more information on work/life balance relative to male students. This gender difference persists when students disclose that they are concerned about work/life balance. In contrast, professionals mention workplace culture to male and female students at similar rates. After the study, female students are more dissuaded from their preferred career path than male students, and this difference is in part explained by professionals’ greater emphasis on work/life balance when responding to female students. Finally, we elicit students’ preferences for professionals and find that gender differences in information provision would remain if students contacted their most preferred professionals. |
| Keywords: | career information, gender, discrimination, correspondence study |
| JEL: | C93 J16 J24 J71 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:upj:weupjo:21-340&r=all |
| By: | Subhasish M. Chowdhury (Department of Economics, University of Bath); Joo Young Jeon (Department of Economics, University of Reading); Chulyoung Kim (School of Economics, Yonsei University); Sang-Hyun Kim (School of Economics, Yonsei University) |
| Abstract: | We investigate gender difference in lying behavior when the opportunity to tell lies is repeated. In specific, we distinguish the situations in which such an opportunity can be planned versus when it comes as a surprise. We use data from an existing study (Chowdhury et al., 2021) and show that when the opportunity to tell a lie comes as a surprise, then on the first occasion, males lie more than females. However, when telling lies can be planned, there is no gender difference in telling a lie. When planning is possible, females tell more lies in the first occasion than when it is not. Males do not show such behavior. On the second and final occasion, males lie more than females only when they either could not plan but had an opportunity to lie before or could plan but did not have to tell a lie before. |
| Keywords: | Dishonesty, Lying, Pre-planning, Gender |
| JEL: | C91 D01 D91 J16 |
| Date: | 2021–01–31 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2021-05&r=all |
| By: | Jose Maria Barrero; Nicholas Bloom; Steven J. Davis; Brent Meyer |
| Abstract: | Drawing on data from the firm-level Survey of Business Uncertainty, we present three pieces of evidence that COVID-19 is a persistent reallocation shock. First, rates of excess job and sales reallocation over 24-month periods have risen sharply since the pandemic struck, especially for sales. We compute these rates by aggregating over monthly firm-level observations that look back 12 months and ahead 12 months. Second, as of December 2020, firm-level forecasts of sales revenue growth over the next year imply a continuation of recent changes, not a reversal. Third, COVID-19 shifted relative employment growth trends in favor of industries with a high capacity of employees to work from home and against those with a low capacity. |
| Keywords: | COVID-19; reallocation shock; business expectations; working from home; Survey of Business Uncertainty |
| JEL: | D22 D84 E23 E24 J21 J62 J63 |
| Date: | 2021–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:89580&r=all |
| By: | Nicholas Bloom; Philip Bunn; Paul Mizen; Pawel Smietanka; Gregory Thwaites |
| Abstract: | We analyze the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted senior management time spent on dealing with the pandemic. |
| JEL: | E0 L2 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28233&r=all |
| By: | Lawrence F. Katz; Jonathan Roth; Richard Hendra; Kelsey Schaberg |
| Abstract: | This paper examines the evidence from randomized evaluations of sector-focused training programs that target low-wage workers and combine upfront screening, occupational and soft skills training, and wraparound services. The programs generate substantial and persistent earnings gains (11 to 40 percent) following training completion. Theoretical mechanisms for program impacts are explored for the WorkAdvance demonstration. Earnings gains are generated by getting participants into higher-wage jobs in higher-earning industries and occupations not just by raising employment. Training in transferable and certifiable skills (likely under-provided from poaching concerns) and reductions of employment barriers to high-wage sectors for non-traditional workers appear to play key roles. |
| JEL: | J24 J38 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:28248&r=all |