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on Human Capital and Human Resource Management |
| By: | Zvonimir Bašić (Adam Smith Business School, University of Glasgow, UK); Stefania Bortolotti (University of Bologna); Daniel Salicath (Norwegian Labour and Welfare Administration); Stefan Schmidt (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Schneider (Max Planck Institute for Research on Collective Goods, Bonn); Matthias Sutter (Max Planck Institute for Research on Collective Goods, Bonn, University of Cologne, Germany, University of Innsbruck, Austria, IZA Bonn, Germany, and CESifo Munich) |
| Abstract: | Incentives are supposed to increase effort, yet individuals react differently to incentives. We examine this heterogeneity by investigating how personal characteristics, preferences, and socio-economic background relate to incentives and performance in a real effort task. We analyze the performance of 1, 933 high-school students under a Fixed, Variable, or Tournament payment. Productivity and beliefs about relative performance, but hardly any personal characteristics, play a decisive role for performance when payment schemes are exogenously imposed. Only when given the choice to select the payment scheme, personality traits, economic preferences and socioeconomic background matter. Algorithmic assignment of payment schemes could improve performance, earnings, and utility, as we show. |
| Keywords: | Effort, productivity, incentives, personality traits, preferences, socio-economic background, ability, heterogeneity, sorting, algorithm, lab-in-the-field experiment |
| JEL: | C93 D91 J24 J41 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:mpg:wpaper:2024_13 |
| By: | Christos A. Makridis; Jason Schloetzer |
| Abstract: | We use a survey of nearly 360, 000 workers conducted from May 2020 through December 2023 to characterize shifts in remote work across time, industry, occupation, and geography, and examine the evolving relationship between remote work and employee engagement. We find remarkable stability in the incidence of remote work since mid-2021 with roughly one-half of workers reporting always working remotely or in a hybrid arrangement. While remote work arrangements across industries remain broad-based, at the occupation level, they are conspicuously concentrated in certain job classifications. Remote work continues to evolve across the U.S., with 13 (14) states experiencing reported increases (decreases) in remote work rates since 2022 with the most populous states experiencing remote working rates exceeding 40% of workers. Empirical evidence shows that while working remotely correlates with higher job satisfaction and lower intentions to quit, these correlations disappear when other workplace characteristics such as pay practices, human resources policies, and managerial relationships are considered. If remote work remains the norm, our results suggest it may not directly influence employee engagement—the workplace still matters. |
| JEL: | J2 J28 M12 M54 O33 R23 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33315 |
| By: | E. Glenn Dutcher; Krista J. Saral |
| Abstract: | Remote work policies remain controversial because of the perceived opportunity for increased shirking outside of the traditional office; a problem that is potentially exacerbated if employees work in a revenue-sharing team environment. Using a controlled experiment, where individuals are randomized to different work locations (remote or an office-like setting), we examine how remote work impacts effort choices under individual pay schemes and in revenue sharing teams. Treatments vary the number of remote workers on a team. Our results suggest that work location alone does not lead to productivity differences. However, the location of partners does impact an individual’s effort levels in revenue-sharing teams. Non-remote workers reduce effort as the number of remote partners increases, and remote workers increase effort as the number of remote workers increases. These results are driven predominantly by those who are relatively less productive as individuals. Post-experiment incentivized survey evidence points to expectations of partner productivity as a contributing factor. |
| JEL: | C9 J21 J24 J28 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33321 |
| By: | Cortes, Guido Matias; Dabed, Diego; Oliveira, Ana; Salomons, Anna |
| Abstract: | We consider how firms' organization of production relates to workers' wages. Using matched employer-employee data from Portugal, we document that firms differ starkly in their occupational employment concentration, even within detailed industries, with some firms employing workers across a broad range of occupations and others being much more specialized. These differences are robustly predictive of wages: a worker employed in a specialized, i.e. "fissured" firm, earns less than that same worker employed in a less specialized firm. This wage penalty for working in a fissured firm is observed across occupations of all skill levels. Firm specialization helps account for the role of firms in inequality, as specialization is strongly negatively related to estimated AKM firm fixed effects. Around two-thirds of the wage penalty from fissuring is explained by differences in firm productivity. Fissured firms also engage in lower rates of rent-sharing conditional on productivity, accounting for around one-quarter of the difference in wage premia between high- and low-specialization firms. Finally, we show that being employed in a specialized firm is also associated with worse longer-term career outcomes for workers. |
| Keywords: | Occupational Segregation, Between-Firm Wage Inequality, Firm Productivity, Rent-Sharing |
| JEL: | J24 J31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:clefwp:307595 |
| By: | Bastani, Spencer (IFAU - Institute for Evaluation of Labour Market and Education Policy); Giebe, Thomas (Department of Economics and Statistics, School of Business and Economics, Linnaeus University); Guertler, Oliver (Department of Economics, University of Cologne) |
| Abstract: | Gender differences in overconfidence are well documented in the empirical literature, but their impact on labor market outcomes remains underexplored. We provide new insights into how behavioral biases interact with career dynamics by presenting a theoretical analysis of how men’s relatively higher overconfidence shapes gender differences in the labor market. Using a promotion-signaling model with competitive work incentives in which wages are endogenously determined, we show that overconfident workers exert more effort, are more likely to be promoted, and ultimately earn higher wages across job levels despite having lower expected ability conditional on promotion. The higher effort not only increases their chances of promotion, but also contributes to human capital accumulation through learning-by-doing, leading to higher productivity. However, overconfidence can be a double-edged sword: while it can lead to higher promotions and wages (serving as a “self-serving bias”), it also imposes higher effort costs and discourages peers, which can make it self-defeating in certain contexts. |
| Keywords: | overconfidence; promotion; competition; gender gap; tournament; theory |
| JEL: | C72 D91 J16 J24 M51 M52 |
| Date: | 2024–11–21 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:ifauwp:2024_021 |
| By: | Katrina Borovickova; Robert Shimer |
| Abstract: | We develop a random search model with two-sided heterogeneity and match-specific productivity shocks to explain why high-productivity workers tend to work at high-productivity firms despite low-productivity workers gaining about as much from such matches. Our model has two key predictions: i) the average log wage that a worker receives is increasing in the worker's and employer's productivity, with low-productivity workers gaining proportionally more at high-productivity firms and ii) there is assortative matching between a worker's productivity and that of her employer. Selective job acceptance drives these patterns. All workers are equally likely to meet all firms, but workers have higher surplus from meeting firms of similar productivity. The high surplus meetings result in matches more frequently, generating assortative matching. Only the subset of meetings that result in matches are observed in administrative wage data, shaping wages. We show that our findings are quantitatively consistent with recent empirical results. Moreover, we prove this selection is not detected using standard empirical approaches, highlighting the importance of theory-guided empirical work. Our results imply that encouraging high-wage firms to hire low-wage workers may be less effective at reducing wage inequality than wage patterns suggest. |
| Keywords: | Assortative matching; labor market |
| Date: | 2024–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedrwp:99249 |
| By: | Prummer, Anja; Squintani, Francesco |
| Abstract: | Motivated by the recent surge in union drives, we present a theoretical model of the factors that influence unionization. An employee seeking to unionize their workplace assembles organizers to persuade coworkers to vote in favor. If unionization benefits workers, it is more likely to succeed when the organizers are credible. Credibility depends on the organizers not being overly biased and/or bearing significant organizational costs. Our theory explains why grassroots movements, rather than established unions, often succeed in organizing workplaces. Interestingly, the likelihood of successful unionization, when it benefits workers, is non-monotonic with respect to organizational costs. When such costs are low, a firm that opposes unionization and targets organizers may paradoxically increase the chances of success. However, the unionization drive is ineffective if the firm's opposition is sufficiently strong, as this makes organizational costs prohibitive. |
| Keywords: | Unions, Labor Organization, Campaigns |
| JEL: | D71 D83 D23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:fubsbe:307603 |
| By: | Huanan Xu; Joseph R. Blasi; Douglas L. Kruse; Richard B. Freeman |
| Abstract: | To what extent, if at all, did employee-owned (EO) firms maintain jobs for workers compared to non-EO firms in the spring 2020 Covid-19 shock to the US economy? Did EO firms shift jobs from workplaces to work-from-home locations in the pandemic more or less than other firms? This paper uses a unique survey of nearly 750 firms that differ in the Employee Stock Ownership Plan (ESOP) mode of employee ownership to answer these questions. The analysis finds that in the Covid crisis ESOPs with majority ownership of their firm maintained proportionately more jobs and shifted work to workers’ homes more than other firms and that these differences scale with the ESOP percentage of firm ownership. The findings are consistent with a model of firm decision-making in which ESOP firms weigh the well-being of employee-owners as workers in the firm in a job crisis while non-ESOP firms view workers solely as a costly input in production in maximizing the income of their (non-employee) owners. |
| JEL: | D2 D7 J2 J3 J4 L2 M5 P13 P5 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33310 |