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on Human Capital and Human Resource Management |
| By: | Jing Cai; Sai Luo; Shing-Yi Wang |
| Abstract: | Higher compensation and increased monitoring are two common strategies for addressing the moral hazard problem between firms and workers. In a field experiment with new hires at an automobile manufacturing firm in China, we randomly varied both signing bonuses and monitoring intensity. Both interventions increased worker output but through different channels: signing bonuses led to longer working hours without significant gains in performance, while enhanced monitoring improved performance as evaluated by managers. Additionally, bonuses reduced quit rates, whereas monitoring raised them. These results suggest that firms should carefully consider their primary objectives and weigh these trade-offs when designing optimal labor contracts. |
| JEL: | C93 J24 J30 M52 O15 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33977 |
| By: | Gianni De Fraja; József Sákovics |
| Abstract: | This paper is a theoretical analysis of the consequences of workplace discrimination. We prove that discrimination against a group at lower levels of the hierarchy affects the pay of members of the same group at higher levels, leading to a “pay gap” relative to non-discriminated workers. These spillovers in turn induce firms to alter the match between workers and jobs for the discriminated group, potentially leading to a “glass ceiling”. The phenomenon can occur even in firms where “equal pay for equal jobs” appears to be adhered to. The explanation is based on the standard participation and incentive constraints: the need to compensate workers for the direct discrimination they suffer, to induce them to work, and the need to maintain pay differentials between job levels, to provide effort incentives. We end the paper showing that neither competition among workers, nor competition among firms for workers eliminates these spillovers. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:not:notnic:2025-11 |
| By: | Marco Fongoni (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Daniel Schaefer (JKU - University of Linz - Johannes Kepler Universität Linz); Carl Singleton (UOR - University of Reading) |
| Abstract: | We investigate how the incompleteness of an employment contract—discretionary and noncontractible effort—can affect an employer's decision about cutting nominal wages. Using matched employer-employee payroll data from Great Britain linked to a survey of managers, we find support for the main predictions of a stylized theoretical framework of wage determination: nominal cuts are at most half as likely when managers believe that their employees have significant discretion over how they do their work, although the involvement of employees, via information sharing, reduces this correlation. We also describe how contract incompleteness and wage cuts vary across different jobs. These findings provide the first observational quantitative evidence that managerial beliefs about contractual incompleteness can account for their hesitancy over nominal wage cuts. This has long been conjectured by economists based on anecdotes, qualitative surveys, and laboratory and field experiments. |
| Keywords: | Wave rigidity, Employment contract, Workplace relations, Employer-employee data, Pay change |
| Date: | 2024–11–29 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05069573 |
| By: | Belot, Michèle (Cornell University); Hakimov, Rustamdjan (University of Lausanne) |
| Abstract: | This study examines the effects of structured social activities on workplace collegiality and performance in a large white-collar firm with 100 geographically dispersed offices. In a randomized controlled trial, half of the offices received subsidies to organize biweekly social events over a three-month period—including picnics, movie nights, and team games. We find that the intervention strengthens collegiality, enhances workplace friendships, and improves office-level performance. We do not detect an impact on individual productivity, but turnover appears to have fallen in the short-run, meaning that employees stayed longer in the job. We explore possible mechanisms and identify a sense of gratitude and reciprocity toward the company as the most likely mechanism driving the effects. |
| Keywords: | bonding, climate, workplace collegiality, field experiment |
| JEL: | M54 J32 C93 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17987 |
| By: | Kyle F. Herkenhoff; Josh Lerner; Gordon M. Phillips; Francisca Rebelo; Benjamin Sampson |
| Abstract: | We measure the real effects of private equity buyouts on worker outcomes by building a new database that links transactions to matched employer-employee data in the United States. To guide our empirical analysis, we derive testable implications from three theories in which private equity managers alter worker outcomes: (1) exertion of monopsony power in concentrated markets, (2) breach of implicit contracts with targeted groups of workers, including managers and top earners, and (3) efficient reallocation of workers across plants. We do not find any evidence that private equity-backed firms vary wages and employment based on local labor market power proxies. Wage losses are also very similar for managers and top earners. Instead, we find strong evidence that private equity managers downsize less productive plants relative to productive plants while simultaneously reallocating high-wage workers to more productive plants. We conclude that post-buyout employment and wage dynamics are consistent with professional investors providing incentives to increase productivity and monitor the companies in which they invest. |
| JEL: | G20 G34 L1 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33942 |
| By: | Francesco Principe (University of Bergamo); Jan van Ours (Erasmus University Rotterdam and Tinbergen Institute) |
| Abstract: | We study labor market dynamics of workers in a highly competitive industry, focusing on the relationship between workers' age, wages, and productivity. Our analysis uncovers an inverse U-shaped relationship. While some wage adjustments occur within the current firm, job mobility plays a crucial role in shaping wage trajectories. There is assortative matching with highly productive workers moving to highly productive firms, while less productive workers gravitate towards less productive firms. Our findings suggest that both in-firm wage progression and wage growth via job mobility contribute to a close alignment between wages and productivity throughout workers' careers. |
| Keywords: | Age-wage profile, productivity, job mobility |
| JEL: | J31 J62 Z22 |
| Date: | 2025–03–21 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20250020 |
| By: | Julien Senn; Jan Schmitz; Christian Zehnder |
| Abstract: | Using a large-scale real effort experiment, we explore whether and how different peer assignment mechanisms affect worker performance and stress. Letting individuals choose whom to compare to increases productivity to the same extent as a targeted exogenous matching policy designed to maximize motivational spillovers. These effects are significantly larger than those obtained through random assignment and their magnitude is comparable to the impact of an increase in pay of about 10 percent. A downside of targeted peer assignment is that, unlike endogenous peer selection, it leads to a large increase in stress. The key advantage of letting workers choose whom to compare to is that it allows those workers who want to be motivated to compare to a motivating peer while also permitting those for whom social comparisons have little benefits or are too stressful to avoid them. Finally, we show that social comparisons yield stronger motivational effects than comparable non-social goals. |
| Keywords: | social comparisons, productivity, stress, incentives, real effort |
| JEL: | C93 J24 M54 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11972 |
| By: | Nicholas Bloom; Jonathan S. Hartley; Raffaella Sadun; Rachel Schuh; John Van Reenen |
| Abstract: | We show better-managed firms are more dynamic in plant acquisitions, disposals, openings, and closings in U.S. Census and international data. Better-managed firms also birth better-managed plants and improve the performance of the plants they acquire. To explain these findings, we build a model with two key elements. First, management is a combination of firm-level management ability (e.g. CEO quality), which can be transferred to all plants, and plant-level management practices, which can be changed through intangible investment (e.g. consulting or training). Second, management both raises productivity and also reduces the operational costs of dynamism: buying, selling, opening, and closing plants. We structurally estimate the model on Census microdata, fitting our key dynamic moments, and then use it to establish three additional results. First, mergers and acquisitions raise economy-wide management and productivity by reallocating plants to firms with higher management ability. Banning M&A would depress GDP and management by about 15 percent. Second, greater product market competition improves both management and productivity by reallocating away from badly managed plants. Finally, management practices account for about a fifth of the cross-country productivity differences with the U.S. |
| Keywords: | Management practices; mergers and acquisitions; productivity; competition |
| JEL: | L2 M2 O32 O33 |
| Date: | 2025–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:101259 |
| By: | Max Coveney (Erasmus University Rotterdam and Tinbergen Institute); Pilar Garcia-Gomez (Erasmus University Rotterdam and Tinbergen Institute); Teresa Marreiros Bago d'Uva (Erasmus University Rotterdam and Tinbergen Institute) |
| Abstract: | Should gender composition be taken into account when forming teams? This paper examines how the output of teams completing tasks similar to those performed in many workplaces is influenced by their gender composition. Leveraging an economics bachelor course in which students are randomly paired together, we document large differences in performance grades by the gender make-up of the team. All-male teams are significantly outperformed by both mixed and all-female teams. These differences remain even when comprehensively controlling for the individual task aptitude of each of the group members, as well as other characteristics potentially relevant for teamwork that may vary by gender. Exploring mechanisms, we find suggestive evidence that women have greater preferences for cooperation, and - even when controlling for individual ability - exert higher effort levels in teams compared to men. This asymmetry appears to lead to members of mixed-gender teams reporting the worst team experiences. |
| Date: | 2025–05–02 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20250032 |