Quarterly Personnel update-- 2021_09
Peter Kuhn
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6. Optimal Monitoring
Prendergast, Canice. 2021 “Drive and Wave: The Response to LAPD Police Reforms After Rampart”. unpublished manuscript, University of Chicago.
Formal oversight of Los Angeles police officers rose dramatically in 1998 following the Rampart scandal, then fell in late 2002. Prendergast shows that police officers responded to the rise in accountability with a practice they labeled “drive and wave”. As a result, the arrest-to-crime rate fell 40%. When oversight and accountability fell back down to their pre-1998 levels, the arrest-to-crime rate also rebounded to its original level. Essentially, Prendergast shows that more Intense monitoring has an undesirable side effect: officers take risk-reducing actions by simply engaging less with the public.
Evidence on Employee Motivation
8. Safelite and Other Incentives Success Stories
Leaver, Clare,, Owen Ozier, Pieter Serneels and Andrew Zeitlin 2021 Recruitment, Effort, and Retention Effects of Performance Contracts for Civil Servants: Experimental Evidence from Rwandan Primary Schools American Economic Review 111(7): 2213-46.
The authors use a novel field experiment to distinguish between the selection and motivation effects of a new pay for performance (P4P) scheme: After allowing people to self-select between P4P and fixed-wage contracts, they then re-assigned some people to the contracts they did not initially want. This way the authors can observe peoples’ performance both under the scheme they prefer and the one they do not. They find that changes in motivation account for 80 percent of the increase in effort associated with P4P.
9.2 Intrinsic, Symbolic and Image Motivation
Beckmann, Michael, and Matthias Kräkel 2021 Empowerment, Task Commitment, and Performance Pay Journal of Labor Economics, forthcoming.
The authors model task commitment –a key concept in social psychology-- as a boost in utility that’s achieved only if a task is successfully completed. They also argue that employers can create task commitment by empowering workers—i.e. by giving them more decision authority about how to do the task. This gives employers some leeway to optimally reduce financial incentives. The authors find some support for these ideas in a large-scale linked employer-employee panel data set, especially for highly skilled workers who are in high demand.
Bandiera, Oriana, Michael Carlos Best, Adnan Qadir Khan, and Andrea Prat 2021 “The Allocation of Authority in Organizations: A Field Experiment with Bureaucrats”. Quarterly Journal of Economics, forthcoming.
The authors use a field experiment to study the effects of (a) financial incentives and (b) shifting authority to frontline workers (procurement officers) from their monitors. affects performance both directly and through the response to incentives. Simply shifting authority this way (downward in the hierarchy) raises the frontline workers’ performance by 9% without reducing quality. In contrast, the effect of performance pay is muted.
11. Income Effects
Golosov, Mikhail, Michael Graber, Magne Mogstad, and David Novgorodsky (2021) How Americans Respond to Idiosyncratic and Exogenous Changes in Household Wealth and Unearned Income, unpublished manuscript, University of Chicago.
The authors study how Americans work behavior responds to winning the lottery. On average, an extra dollar of lottery winnings in a given period reduces pre-tax labor earnings by about 50 cents. These reductions are even greater among higher-income households. These large, negative income effects on labor supply are very different from the small ones found by Cesarini et al. in Sweden.
Selection
17: Setting Pay: Monopsony Models
Brooks, Wyatt, Joseph P. Kaboski, Illenin O. Kondo,
Yao Amber Li, and Wei Qian (2021) Infrastructure Investment and Labor Monopsony Power NBER
working paper no 28977
Using panel data on manufacturing firms and an expansion of the national
highway system in India, the authors
study whether transportation infrastructure disrupts local monopsony power in
labor markets. They find that monopsony power in labor markets is reduced among
firms near newly constructed highways relative to firms that remain far from
highways. They estimate that the highways reduce wage markdowns significantly.
17.b Wage Bargaining
Biasi, Barbara and Heather Sarsons. 2020 “Flexible Wages, Bargaining, and the Gender Gap” NBER working paper no. 28794”
Using a 2011 reform that allowed Wisconsin school districts to set teachers’ pay more flexibly, the authors show that flexible pay increased the gender pay gap among teachers with the same credentials. Survey evidence suggests that the gap is partly driven by women not engaging in negotiations over pay, especially when their counterpart is a man.
19A Benefits
Bartel, Ann P., Maya Rossin-Slater, Christopher
J. Ruhm, Meredith Slopen, and Jane Waldfogel (2021) The Impact of Paid Family
Leave on Employers: Evidence from New York IZA discussion
paper no. 14262.
To study how employers were affected by New
York’s 2018 Paid Family Leave policy, the authors surveyed matched pairs of New
York and Pennsylvania firms concerning a variety of HR issues before and after
New York’s policy was introduced. They
found that paid family leave increased employers' rating of their ease of
handling long employee absences.
Tô, Linh T. 2021 The Signaling Role of Parental Leave Unpublished paper, Boston University.
To signal their commitment to their firm and their careers, workers may forgo taking paid parental leave. When workers have a choice of taking different amounts of leave, however, the signals sent by workers’ leave-taking become more complicated. The author studies this relationship using administrative data from Denmark and a parental leave policy that extended the maximum allowed duration of parental leave.
Teams
24.4: Inducing Efficient Effort—Group Piece Rates and Group Bonuses
Jacobs, Joshua A., Aaron M. Kolb and Curtis R. Taylor (2021) Communities, Co-ops, and Clubs: Social Capital and Incentives in Large Collective Organizations American Economic Journal: Microeconomics, 13(3): 29–69
The authors study how voluntary organizations can incentivize their members without monetary rewards. They imagine an organization in which each member's output is an imperfect signal of his underlying effort, and each member's utility from remaining in the organization depends on the other members’ efforts. Incentives can be provided only through two channels: expulsion following poor performance and the reward of a ‘rest’ period respite following good performance. The authors show that fully efficient effort by all members can be implemented by linking these punishments and rewards to a performance-tracking reputation system.
26.3.a Do Managers Matter? Evidence
on Leadership
Englmaier, Florian, Stefan Grimm, Dominik Grothe, David Schindler and Simeon Schudy. The Value of Leadership: Evidence from a Large-Scale Field Experiment CESifo Working Paper No. 9273, August 2021
The causal impact of leadership on team performance is hard to measure, because leadership in teams is not randomly assigned. To circumvent this problem, the authors randomly encourage teams to select a leader before performing a complex task in a large-scale natural field experiment. They find that leadership encouragement increases the fraction of teams solving the task within the given time limit by about 25%, without reducing the originality of solutions.
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.