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Evidence on Employee Motivation
Intrinsic, Symbolic
and Image Motivation:
Corgnet, Brice, Simon
Gächter and Roberto Hernán González. (2020)
Working
Too Much for Too Little: Stochastic Rewards Cause Work Addiction IZA discussion paper no. 12992.
While economic models usually predict that people are less attracted to
stochastic rewards than certain ones, neuroscience research with animals has
shown that stochastic rewards may act as a powerful motivator. Applying these ideas to the study of work addiction
in humans, the authors demonstrate how stochastic rewards may lead people to
continue working on a repetitive and effortful task even after monetary
compensation becomes saliently negligible, causing significant employee
stress. They discuss the economic and
managerial implications of these findings.
Nikolova, Milena and Femke Cnossen. (2020) What Makes Work Meaningful and Why
Economists Should Care about It IZA discussion paper no. 13112
Using three waves of the European Working Conditions Survey, the authors show
that autonomy, competence, and relatedness explain about 60 percent of the
variation in reported meaningfulness of peoples’ work. Financial factors, such as income, benefits,
and performance pay, pay a less important role.
Meaningful work also predicts absenteeism, skills training, and
retirement intentions.
Present Bias and
Procrastination:
Breig, Zachary,
Matthew Gibson and Jeffrey G. Shrader (2020)
Why Do We
Procrastinate? Present Bias and Optimism IZA discussion
paper no. 13060
While procrastination is typically modeled as resulting from
present bias, we consider an alternative explanation: excessively optimistic
beliefs about future demands on an individual's time. The explanations can be
distinguished by how individuals respond to information on their past choices.
Experimental results rule out present bias as the only cause of dynamic
inconsistency, and they are consistent with optimism. These findings might explain the relatively
low demand for commitment devices, and suggest that giving people information
on their own past choices might mitigate procrastination.
Islam, Asadul, Sungoh Kwon, Eema Masood, Nishith Prakash, Shwetlena Sabarwal
and Deepak Saraswat (2020) When Goal-Setting Forges Ahead but
Stops Short
IZA discussion paper no. 13188
In a large-scale social experiment, the authors find that goal-setting has
a significant positive impact on student time use, study effort, and
self-discipline, but no impact on test scores. In part, this is because about 2/3rd of
students do not set realistic goals.
Fairness Among Workers
Perez-Truglia, Ricardo
(2020) The
Effects of Income Transparency on Well-Being: Evidence from a Natural
Experiment American Economic Review
110(4): 1019–1054
In 2001, Norwegian tax records became easily accessible
online, allowing everyone in the country to observe the incomes of everyone
else. According to the income
comparisons model, this change in transparency can widen the gap in well-being
between richer and poorer individuals. Using survey data from 1985–2013 and
multiple identification strategies, we show that the higher transparency
increased the gap in happiness between richer and poorer individuals by 29
percent, and it increased the life satisfaction gap by 21 percent.
Brune, Lasse, Eric
Chyn, and Jason Kerwin (2020) Peers
and Motivation at Work: Evidence from a Firm Experiment in Malawi Journal of Human Resources.
This paper studies workplace peer effects by randomly
varying work assignments at a tea estate in Malawi. We find that increasing
mean peer ability by 10 percent raises productivity by 0.3 percent. These effects
appear to operate through “motivation”: given
the choice to be reassigned, most workers prefer working near high-ability
co-workers because these peers motivate them to work harder.
Income Effects
Bick, Alexander,
Nicola Fuchs-Schündeln, David Lagakos and Hitoshi Tsujiyama (2020) Why
Are Average Hours Worked Lower in Richer Countries? IZA discussion paper no. 13156
We consider two natural explanations for this phenomenon: income effects versus
progressive tax systems, which are more prevalent in richer countries. Calibrating a simple labor supply model to
match international data, the model predicts that income effects are the main
driving force behind the decline of average hours worked with GDP per capita.
Banerjee, Abhijit,
Dean Karlan, Hannah Trachtman, and Christopher R. Udry (2020) Does
Poverty Change Labor Supply? Evidence from Multiple Income Effects and 115,579
Bags NBER working paper no.
27314.
The authors measure how labor supply and effort in northern
Ghana respond to exogenous changes in income and wages using a randomized
evaluation of a multi-faceted grant program combined with a bag-making
operation. Contrary to most other estimates of income effects, they find that
recipients of the grant program increase, rather than reduce, their supply of
labor. They argue that these results are
best explained by a model that allows for a positive psychological productivity
effect from higher income.
Selection
Employment Protection
Legislation:
Doepke, Matthias and Ruben Gaetani (2020) Why Didn't the College
Premium Rise Everywhere? Employment Protection and On-the-Job Investment in
Skills NBER working paper no.
27331
The authors develop a model where firms and workers make
relationship-specific investments in skill accumulation. The incentive to
invest is stronger when employment protection creates an expectation of
long-lasting matches. The authors argue
that the relative decline of employment protection for less-educated workers in
the U.S. (compared to Germany), can account for much of decline in those
workers’ earnings in the U.S, compared to the better-protected workers in
Germany.
Screening:
Bartling, B., Fehr,
E., & Schmidt, K. M. (2012). Screening, competition, and job design:
Economic origins of good jobs. American Economic Review, 102(2),
834-64.
High-performance work systems give workers more discretion,
thereby increasing effort productivity but also shirking opportunities. But
they only work if workers are carefully screened for work attitude, and labor
markets are competitive. The authors
show that two fundamentally distinct job designs can survive in equilibrium:
"bad" jobs with low discretion, low wages, and little rent-sharing,
and "good" jobs with high discretion, high wages, and substantial
rent-sharing.DEmployee Evaluation:
Choosing from the Pool:
Rambachan, Ashesh,
Jon Kleinberg, Sendhil Mullainathan, and Jens Ludwig (2020) An Economic Approach to
Regulating Algorithms NBER working paper
no. 27111.
The authors use the methods of welfare economics to study
the optimal design of algorithms used in a variety of contexts, including
personnel selection. The socially
optimal regulation of algorithms depends on whether the designer can be forced
to disclose how the algorithm works, including the data, training procedure and
decision rule. If disclosure is not
possible, optimal regulation might involve prohibiting algorithms from using
certain characteristics, such as race and gender, in their procedures.
Setting Pay-- Monopsony Models
Marinescu, Ioana
E., Ivan Ouss, and Louis-Daniel Pape (2020)
Wages, Hires, and Labor Market
Concentration IZA
discussion paper no. 13244,
The authors the concentration of new hires by occupation and
commuting zone in France using linked employer-employee data. Consistent with
monopsony models, a 10% increase in labor market concentration decreases hires
by 12.4% and the wages of new hires by nearly 0.9%. A merger between the top two employers in the
retail industry would result in about 24 million euros in annual lost wages for
new hires, and an 8000 decrease in annual hires.
Kroft, Kory, Yao Luo, Magne Mogstad, and Bradley Setzler (2020)
Imperfect Competition and Rents in Labor andProduct Markets: The Case of the Construction Industry NBER working paper no. 27325
The authors quantify the importance of imperfect competition in the U.S.
construction industry by estimating the size of rents earned by American firms
and workers. They find that American
construction firms have significant wage- and priice-setting power. Two thirds
of the resulting rents are captured by the firms.
Setting Pay-- Deferred Compensation:
Frederiksen, Anders
and Colleen Flaherty Manchester (2019) Regulation and Firm-provided Incentives IZA discussion paper no. 12264.
By prohibiting mandatory retirement clauses in employment
contracts, the Age Discrimination and Employment Act reduced firms’ ability to
use deferred compensation to incentivize workers. Using internal data from a large U.S.
services company, the authors show that the firm responded with increased use
of pay-for-performance. This was especially true for older workers, whose
promotion prospects dimmed significantly when the law allowed their supervisors
to lengthen their careers.
Training
Doepke, Matthias and
Ruben Gaetani (2020) Why Didn't the College
Premium Rise Everywhere? Employment Protection and On-the-Job Investment in
Skills NBER working paper no.
27331
The authors develop a model where firms and workers make
relationship-specific investments in skill accumulation. The incentive to
invest is stronger when employment protection creates an expectation of
long-lasting matches. The authors argue
that the relative decline of employment protection for less-educated workers in
the U.S. (compared to Germany), can account for much of decline in those
workers’ earnings in the U.S, compared to the better-protected workers in
Germany.
Tournaments
Selection Tournaments and Affirmative Action:
Fang, Dawei and Thomas Noe (2019) Less competition, more meritocracy?
Unpublished paper, Gothenburg University.
Studie the effects of high-risk strategies (trying to “win
by luck”) in selection tournaments, whose goal is to identify the ablest
contestants in a pool. When many
contestants compete for a few promotions, strategic contestants adopt high-risk
strategies, which reduce the correlation between performance and ability. To prevent this from happening, it can be
optimal to raise the share of contestants who are promoted, even to the point
where some promoted contestants are sure to be of low ability.
Black, Sandra E., Jeffrey T.
Denning, and Jesse
Rothstein (2020) Winners and Losers? The Effect of
Gaining and Losing Access to Selective Colleges on Education and Labor Market
Outcomes,NBER Working
Paper 26821.
Texas’s top 10 percent rule is a type of affirmative action
that guarantees access to a highly selective university for the top ten percent
of students in every high school. makes
it easier explore the effects of attending an elite institution on both those
who are newly admitted and those who are pushed out by the introduction of the
Texas Top 10 Percent rule. Students who
gained access to UT Austin because of this policy became more likely to
graduate from college and experienced some earnings gains. Students who lost access attended less
selective colleges, but did not see declines in overall college enrollment,
graduation, or earnings. The Top Ten Percent rule, introduced for equity
reasons, thus also seems to have improved efficiency.
Teams
Selection into Teams:
Chiappori, Pierre-André,
Monica Costa Dias, and Costas Meghir (2020) Changes in Assortative
Matching: Theory and Evidence for the US NBER working paper no. 26932
Using a new, general approach to measuring assortative matching in the marriage
market, the authors conclude that assortative matching in the US over the last
decades, particularly at the top of the education distribution.
Adhvaryu,
Achyuta, Vittorio Bassi, Anant Nyshadham, and Jorge A. Tamayo (2020) No Line Left Behind:
Assortative Matching Inside the Firm
NBER
working paper no. #27006
The authors find negative
assortative matching (NAM) between workers and managers in a large readymade
garment manufacturer in India, despite the fact that positive matching would
yield 1 to 4 percent more output. The authors explain these results by arguing
that long-term relationships with the firm’s buyers forces itto maintain a
minimum productivity level across all its production lines, by balancing
less-able workers with better managers, and vice versa.
Fischer, Mira, Rainer Michael Rilke, B. Burcin Yurtoglu (2020) Two Field Experiments on
Self-Selection, Collaboration Intensity, and Team Performance IZA Discussion paper no. 13201
Studies how self-selection and random assignment affect team performance
for different tasks in two natural field experiments. When the task does not require much
collaboration, self-selected teams perform significantly worse than randomly
assigned teams. But self-selected teams
perform better in more collaborative tasks.
In both cases, self-selected teams exhibit positive assortative matching,
with subjects more likely to match with those of similar ability and the same
gender.
Skill Mix, Information Sharing, and Team Performance:
Weidmann, Ben and
David J. Deming (2020) Team Players: How Social
Skills Improve Group Performance NBER working paper no. 27071
The authors design and test a new method for identifying which
individuals contribution the most to a team’s performance, and find that some
people consistently cause their group to exceed its predicted performance. These
“team players” score significantly higher on a well-established measure of
social intelligence, but do not differ across a variety of other dimensions,
including IQ, personality, education and gender. This social skill improves group performance
about as much as IQ.
Thanks for your
attention!
Note: The article descriptions in these updates
are not copies of the authors’ abstracts.
While they may use text from those abstracts (and/or the article), they
are my own summaries that (a) endeavor to be shorter than most abstracts, and
(b) attempt to place the article in the broader context of personnel economics
as a field. I hope that you will find
them helpful.
Thanks for your attention!
Note: The article descriptions in these updates are not copies of the authors’ abstracts. While they may use text from those abstracts (and/or the article), they are my own summaries that (a) endeavor to be shorter than most abstracts, and (b) attempt to place the article in the broader context of personnel economics as a field. I hope that you will find them helpful.
