(final) Quarterly Personnel Update—2023_09

[Peter Kuhn]

It's been a pleasure, but I'm sorry to say this will be my last quarterly email update.  Other commitments are about to claim a big chunk of my time, and it is just under a year till the new Handbook of Labor Economics is scheduled to appear. Its chapter on "New Developments in Personnel Economics" (by Kathryn Shaw, Chris Stanton, and Mitch Hoffman), plus other new initiatives, will provide excellent overviews and resources as our field continues to grow.  

The website:

Personnel Economics Resources 

will remain available indefinitely, and I hope to keep updating it, though not at regular quarterly intervals.  Please remember that it is easily searchable from the home page; I  find it quite useful when I'm looking for a reference myself.  

With that said, thanks for your attention!  

This quarter's new references are: 

5.7:  Ratchet Effects

 

Abeler, Johannes, David Huffman and Collin Raymond. 2023 Incentive Complexity, Bounded Rationality and Effort Provision  CESifo Working Paper No. 10541.

 

The authors study a workplace where a worker’s future piece rate is reduced (via a formula) if they produce more output today.  In this setting, how can the firm prevent workers from strategically restricting their output today (to avoid future rate cuts)?  The authors show that ‘shrouding’ (i.e. making the connection between today’s performance and tomorrow’s pay rate harder to understand) can achieve this goal.

 

9.2 Intrinsic, Symbolic and Image Motivation

Conti, Annamaria, Vansh Gupta, Jorge Guzman, and Maria P. Roche 2023, Incentivizing Innovation in Open Source: Evidence from the GitHub Sponsors Program NBER working paper no. #31668

The authors show that introducing monetary rewards to motivate innovators to contribute to open-source products on GitHub.  The authors find that developers who opted into the program increased their output after the program's launch. Developers who actually received an award, however, reduced their innovative activity (as measured by new repository creation) substantially. They conclude that receiving an extrinsic reward may crowd out developers' intrinsic motivation, diverting their effort away from community and service-oriented activities on open source.

 

10.1-10.3:  Gift Exchange and Reciprocity

 

Fehr, Ernst and Gary Charness 2023. Social Preferences: Fundamental Characteristics and Economic Consequences CESifo Working Paper No. 10488 (June).

 

The authors review the vast literature on social preferences.  Topics covered include how peoples’ distributional preferences are affected by merit, luck, and risk, and concerns for equality of opportunity. The evidence indicates that the big majority of individuals have some sort of social preference while purely self-interested subjects are a minority.

 

10.6 Trust and the Cost of Control

Relational Contracts

 

Matthias Fahn, W. Bentley MacLeod, Gerd Muehlheusser 2023 Past and Future Developments in the Economics of Relational Contracts IZA discussion paper no. 16427

 

This document introduces a book, "Symposium on Relational Contracts", that contains eleven contributions to the economics of relational contracts, written by many of the leading scholars in the field.

 

14:  Recruitment: Formal versus Informal? Broad versus Narrow?

Networks

Evsyukova, Yulia , Wladislaw Mill, and Felix Rusche 2023 LinkedOut! Discrimination in Job Network Formation unpublished paper, University of Mannheim. 

Using a two-stage field experiment with 400+ fictitious LinkedIn profiles, the authors study the effect of discrimination Black individuals’ job network formation across the U.S.  Applying an algorithm to vary race via A.I.-generated images, they find that (compared to identical Black users) White users acquire networks that at 13% larger, because their connection requests are more likely to be accepted.  Data from users’ CVs reveals that contrary to expert predictions, discrimination is very widespread, particularly among women and younger users.

 

17:  Setting Pay:  Monopsony Models

Roussille, Nina, and Benjamin Scuderi 2023. Bidding for Talent: A Test of Conduct in a High-Wage Labor Market IZA DP No. 16352
Using data on workers' choice sets and decisions over real jobs from a U.S. job search platform, the authors assess whether oligopsonistic or monopsonistic models better describe employers’ wage- and amenity-setting behavior.  They conclude that the monopsonistic model performs better, and that employers ‘mark down’ wages by 19.5%, relative to workers’ productivity.

 

Non-Compete and No-Poaching Agreements

Johnson, Matthew S. ,Michael Lipsitz, and Alison Pei 2023  Innovation and the Enforceability of Noncompete Agreements NBER working paper no. 31487

The authors examine how the legal enforceability of NCAs affects innovation, as measured by patenting. They find that making NCAs easier to enforce (“stricter” enforceability) substantially reduces the rate of patenting: an average-sized increase in NCA enforceability leads a state to have 16-19% fewer citation-weighted patents over the following 10 years. This is because stricter NCA enforceability reduces job mobility and new business formation in innovative industries, reducing knowledge spread.

Callaci, Brian, Matthew Gibson, Sergio Pinto, Marshall Steinbaum and Matt Walsh:  The Effect of Franchise No-Poaching Restrictions on Worker Earnings  IZA discussion paper no. 16330.

The authors evaluate the impact of the Washington State Attorney General's 2018-2020 enforcement campaign against employee no-poaching clauses in franchising contracts. Using Burning Glass Technologies job vacancies and Glassdoor salary reports, they estimate the nationwide effect of the enforcement campaign on pay at franchising chains across numerous industries, finding that workers’ earnings increased by about 5 percent after no-poaching clauses became unenforceable.

18:  Setting Pay:  Efficiency Wages

 

Downsizing

Keum, Dongil Daniel and Stephan Meier 2023 License to Layoff? Unemployment Insurance and the Moral Cost of Layoffs Organization Science, published 27 Jul 2023.

The authors study how managers’ use of layoffs responded to expansions in unemployment insurance that reduced laid-off workers’ economic hardship.  They find that these expansions ‘licensed‘ larger layoffs. The effects are stronger for chief executive officers (CEOs) with stronger prosocial preferences who dismiss fewer workers despite low performance, such as non-Republican, internally promoted, small town, or family firm CEOs, and weaker for CEOs who face shareholder or financial pressures.

 

19A Non-Wage Compensation

Lavetti, Kurt. Compensating Wage Differentials in Labor Markets: Empirical Challenges and Applications Journal of Economic Perspectives 37 (3), 189-212

The model of compensating wage differentials is among the cornerstone models of equilibrium wage determination in labor economics. However, empirical estimates of compensating differentials have faced persistent credibility challenges. This article summarizes the basic theoretical model of compensating differentials, and summarizes several decades of empirical research devoted to estimating the size of compensating differentials.

 

25:  Team Production in Practice

 

Ai, Wei, Yan Chen, Qiaozhu Mei, Jieping Ye, and Lingyu Zhang Putting Teams into the Gig Economy: A Field Experiment at a Ride-Sharing Platform Management Science, Vol. 69, No. 9: 5336-5353.

While gig work offers high levels of autonomy and flexibility, a common cause of turnover is the lack of work identity and coworker bonds.  To address this concern, the authors randomly assign ride-sharing workers to a team formation and inter-team contest field experiment.  They find that treated drivers work longer hours and earn 12% higher revenue during and after the contest.  They argue that platform designers can leverage team identity and team contests to increase revenue and worker engagement in a gig economy.

 

27.2:  Skill Diversity, Information Sharing, and Team Performance

 

Hardt, David, Lea Mayer, and Johannes Rincke 2023. Who Does the Talking Here? The Impact of Gender Composition on Team Interactions CESifo Working Paper No. 10550.

 

The authors study how the gender composition of teams affects team interactions using an online experiment where communication is essential for productivity.  They find that all-male teams communicate more than all-female teams, and outperform all-female and mixed-gender teams. In mixed teams, men talk much more than women.