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86
Firm-Wide Incentives and Mutual Monitoring at Continental Airlines
- Journal of Labor Economics
, 2001
"... scheme that promised monthly bonuses to all 35,000 hourly em-ployees if the company achieved a firm-wide performance goal. Con-ventional wisdom suggests that free riding will render such schemes ineffective. We present evidence indicating that the incentive scheme raised employee performance despite ..."
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Cited by 138 (0 self)
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scheme that promised monthly bonuses to all 35,000 hourly em-ployees if the company achieved a firm-wide performance goal. Con-ventional wisdom suggests that free riding will render such schemes ineffective. We present evidence indicating that the incentive scheme raised employee performance despite the apparent threat of free rid-ing. To explain why the scheme may have been effective we argue that the organization of employees into autonomous work groups enabled Continental to induce mutual monitoring among employees within each work group. I.
Motivation crowding theory: A survey of empirical evidence.
- Journal of Economic Surveys,
, 2001
"... Abstract: The motivation crowding effect suggests that an external intervention via monetary incentives or punishments may undermine (and under different indentifiable conditions strengthen) intrinsic motivation. As of today, the theoretical possibility of crowding effects is widely accepted among ..."
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Cited by 125 (16 self)
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Abstract: The motivation crowding effect suggests that an external intervention via monetary incentives or punishments may undermine (and under different indentifiable conditions strengthen) intrinsic motivation. As of today, the theoretical possibility of crowding effects is widely accepted among economists. Many of them, however, have been critical about its empirical relevance. This survey shows that such scepticism is unwarranted and that there exists indeed compelling empirical evidence for the existence of crowding out and crowding in. It is based on circumstantial insight, laboratory studies by both psychologists and economists as well as field research by econometric studies. The presented pieces of evidence refer to a wide variety of areas of the economy and society and have been collected for many different countries and periods. Crowding effects thus are an empirically relevant phenomenon, which can, in specific cases, even dominate the traditional relative price effect.
Responsibility and Effort in an Experimental Labor Market
- Journal of Economic Behavior and Organization
, 2000
"... Abstract: Previous indirect evidence suggests that impulses towards pro-social behavior are diminished when an external authority is responsible for an outcome. The responsibility-alleviation effect states that a shift of responsibility to an external authority dampens internal impulses toward hones ..."
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Cited by 43 (13 self)
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Abstract: Previous indirect evidence suggests that impulses towards pro-social behavior are diminished when an external authority is responsible for an outcome. The responsibility-alleviation effect states that a shift of responsibility to an external authority dampens internal impulses toward honesty, loyalty, or generosity. In a gift-exchange experiment, we find that subjects respond with more generosity (higher effort) when wages are determined by a random process than when assigned by a third party, indicating that even a slight shift in perceived responsibility for the final payoffs can change behavior. Responsibility-alleviation can be a factor in economic environments featuring substantial personal interaction. * Financial support from the Vice-Chancellor for Research Fund at UC-Berkeley is gratefully acknowledged. I thank George Akerlof, David. I. Levine, Rob MacCoun, Ted O’Donoghue, Matthew The responsibility-alleviation effect states that shifting responsibility for an outcome to an external authority dampens internal impulses toward honesty, loyalty, or generosity. 1 Efficiency and performance may consequently be adversely affected. In this
Misselling through Agents
"... This paper analyzes the implications of the inherent conflict between two tasks performed by direct marketing agents: prospecting for customers and advising on the product’s “suitability ” for the specific needs of customers. When structuring salesforce compensation, firms trade off the expected los ..."
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Cited by 40 (7 self)
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This paper analyzes the implications of the inherent conflict between two tasks performed by direct marketing agents: prospecting for customers and advising on the product’s “suitability ” for the specific needs of customers. When structuring salesforce compensation, firms trade off the expected losses from “misselling ” unsuitable products with the agency costs of providing marketing incentives. We characterize how the equilibrium amount of misselling (and thus the scope of policy intervention) depends on features of the agency problem including: the internal organization of a firm’s sales process, the transparency of its commission structure, and the steepness of its agents’ sales incentives. (JEL M31, M37, M52) When purchasing unfamiliar products, consumers often rely on information and advice provided by representatives of the seller. This creates the possibility of “misselling, ” the questionable practice of a salesperson selling a product that may not match a customer’s specific needs. 1 This problem is particularly severe in markets for technically complex products, such as consumer electronics, auto repairs, medical care, and retail financial services including securities,
Wages, productivity and aging
- De Economist
, 2011
"... Development Canada. The usual caveats apply. In this article, we estimate age based wage and productivity differentials using linked employer-employee Canadian data from the Workplace and Employee Survey 1999-2003. Data on the firm side is used to estimate production functions taking into account th ..."
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Cited by 14 (0 self)
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Development Canada. The usual caveats apply. In this article, we estimate age based wage and productivity differentials using linked employer-employee Canadian data from the Workplace and Employee Survey 1999-2003. Data on the firm side is used to estimate production functions taking into account the age profile of the firm’s work-force. Data on the workers ’ side is used to estimate wage equations that also depend on age. Results show concave age-wage and age-productivity profiles. Wage-productivity comparisons show that the productivity of workers aged 55 and more with at least an undergraduate degree is lower than their wages. For other groups, we find that wages do not deviate significantly from productivity estimates.
2006): “Sorting and Incentive Effects of Pay-forPerformance: An Experimental Investigation,” Academy of Management Journal, forthcoming
"... *The alphabetical ordering of the authors ’ names does not reflect the relative contribution of each author. **Corresponding Author Acknowledgements: We would like to thank Professor Allan Layton and the School of ..."
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Cited by 12 (1 self)
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*The alphabetical ordering of the authors ’ names does not reflect the relative contribution of each author. **Corresponding Author Acknowledgements: We would like to thank Professor Allan Layton and the School of
Economic analysis of the Florida minimum wage proposal
, 2004
"... and Ozgur Organhazi. We also benefited from comments on a previous draft by staff members of the Center for American Progress, especially Christian Weller. Robert Pollin is also grateful for comments on a preliminary oral presentation of parts of this analysis by members of the State’s Fiscal Impact ..."
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Cited by 6 (1 self)
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and Ozgur Organhazi. We also benefited from comments on a previous draft by staff members of the Center for American Progress, especially Christian Weller. Robert Pollin is also grateful for comments on a preliminary oral presentation of parts of this analysis by members of the State’s Fiscal Impact Estimating
A Test of an Efficiency Model of Grievance Activity
- Industrial and Labor Relations Review
, 1991
"... The authors develop a model in which the extent of use of a grievance system is determined by wage premiums and alternative job opportuni-ties. Specifically, they hypothesize that when workers enjoy compara-tively high wages or are faced with poor alternative job opportunities, they are less likely ..."
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Cited by 6 (0 self)
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The authors develop a model in which the extent of use of a grievance system is determined by wage premiums and alternative job opportuni-ties. Specifically, they hypothesize that when workers enjoy compara-tively high wages or are faced with poor alternative job opportunities, they are less likely to use withdrawal mechanisms that might lead to dismissal (such as shirking or absenteeism) and more likely to use grievance procedures to address workplace problems. The results of an analysis of data for the year 1982 from a large manufacturing company are consistent with this hypothesis. EMPLOYEE grievances are one of the most common measures used to evaluate the level of conflict between workers and man-agement and the overall state of employee relations. There has been little conclusive research on the causes of grievances, how-ever, and none of the published studies on the subject consider the role that factors out-side the organization, such as labor market conditions, might play in determining the rate of grievances. In this paper we develop a simple model in which the extent of use of the grievance system to resolve conflicts is determined by wage premiums and alterna-tive job opportunities. The model is tested using data for 1982 taken from a large multi-plant manufacturing company.
The turnover costs and the Solow condition in an efficiency wage model with intertemporal optimization
- Economics Letters
, 1994
"... Abstract This paper sets out an intertemporal optimizing model embodying the efficiency wage hypothesis, and examines whether the Solow condition is valid. It is shown that, unless the turnover costs are absent and the voluntary quitting rate is independent from wage offer, the effort-wage elastici ..."
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Cited by 4 (0 self)
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Abstract This paper sets out an intertemporal optimizing model embodying the efficiency wage hypothesis, and examines whether the Solow condition is valid. It is shown that, unless the turnover costs are absent and the voluntary quitting rate is independent from wage offer, the effort-wage elasticity is less than unity. Our result thus can be regarded as a theoretical solution of the Akerlof and Yellen criticism on the efficiency wage theory.
The Impact of Minimum Wages on Job Training: An empirical exploration with . . .
, 2000
"... Using data from the National Employer Survey (NES), this study examines the relationship between wages and on-the-job training. Traditional theory argues that workers may finance onthe-job human capital accumulation through lower wages. A binding minimum wage may, therefore, reduce workplace trainin ..."
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Cited by 4 (0 self)
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Using data from the National Employer Survey (NES), this study examines the relationship between wages and on-the-job training. Traditional theory argues that workers may finance onthe-job human capital accumulation through lower wages. A binding minimum wage may, therefore, reduce workplace training if it prevents low-wage workers from offering wage cuts to help finance training. Empirical findings in this area have failed to reach a consensus on the training effects of minimum wages. However, previous research has relied primarily on survey data from individual workers, which typically possess poor measures of job training and little information about the characteristics of firms. Unlike previous research, this study addresses the issue of minimum wages and on-the-job training with a unique employer survey. We find strong evidence to suggest that minimum wages are associated with a reduction in the percentage of an establishment’s workforce receiving training, but only weak evidence indicating that minimum wages reduce the average number of hours establishments devote to training activities.
