On the effects of incentive framing on bribery: evidence from an experiment in Burkina Faso

While incentive framing has been shown to promote workers’ effort, little is known about how it affects other dimensions of the employer-employee relationship. This paper examines whether incentive framing can also influence workers propensity to engage in an activity disloyal to their employer: corruption. To do so, we conducted an experiment in which graders are offered a bribe to report a better grade. Three treatments are conducted by framing economically equivalent contracts as menus of bonuses, penalties, or bonuses and penalties. We find that graders are more corrupt when incentives are framed as a combination of bonuses and penalties, while no difference is found between the bonus and the penalty contracts. These results are inconsistent with both standard economic theory and labor reciprocity.     

How to beat the average

Empirical evidence has shown that people systematically overrate own performance relatively to others. This paper investigates production with identical workers where each one believes to be more productive than other workers. In a simple efficiency wage model, we ask how these seemingly incompatible beliefs can be made compatible with one another. We suggest that to compensate for the subjectively perceived productivity gap, each worker chooses an effort level lower than that attributed to others. The latter is estimated as the lowest effort that allows to pass the firm's monitoring test. Since rational agents will not maintain expectations which turn out to be systematically wrong, we introduce a "consistency requirement for false beliefs". Accordingly, predictions based on the "wrong" model must agree with the observations of the "true" model. We show that even with consistency, less effort is supplied than in the full information setting. Hence, the wage-effort relationship gets less efficient from the firm's viewpoint. At a first sight, at the firm-level workers gain from holding false beliefs, while profits unambigously fall. At the aggregate market outcome, however, the firms' labor demand declines, total output falls, and the rate of unemployment rises, decreasing workers utility again.     

In Search of Late Career: A Review of Contemporary Social Science Research Applicable to the Understanding of Late Career

Concerns expressed in the mid-1990s about the lack of research on late career are no longer valid. There is a growing body of research; however, it is scattered across a range of disciplines. In an effort to gather current thinking on late career, this review draws upon work addressing chronological aging, labor economics, sociology and social psychology, retirement research, human resource management, and career theory. Several cross-disciplinary observations were made: (1) Cognitive declines with age are not sufficient to impact work performance; (2) Current economic models assume declining productivity among older workers, but this reflects perceptions rather than reality; (3) Aging may be better understood as a series of discrete transformations rather than as a continuous process of decline; (4) A productive use of older workers recognizes individuals' specific strengths and the increasingly distinctive individual differences among older workers.     

Order review/release in the absence of adherence to formal scheduling policies

In many plants, the performance of shop floor workers is measured by accounting-based productivity criteria. Such systems encourage workers to maximize their individual performance, often at the expense of total shop performance. One such company, Union Switch & Signal, a manufacturer of railroad equipment, has decided to increase finished goods inventory in an effort to counteract poor due date performance. Management at Union Switch & Signal feel that workers not following priorities contribute significantly to this poor performance. It has been suggested that the controlled release of jobs into the shop, i.e., Order Review/Release (ORR), may provide the operations manager a vehicle for enforcing job priorities when formal dispatching rules are not strictly followed by workers. In this study, two ORR methodologies are studied in regards to their ability to offset the dysfunctional behavior by workers who seek to maximize their own individual productivity. This type of behavior was captured by simulating the phenomenon of `cherry picking'. Cherry picking occurs when a job is selected for processing based not on its formal priority but on the difference in standard allowable processing time and actual processing time. Results suggest that at least one ORR methodology is able to reduce the difference in resulting labor productivity while improving overall shop performance.     

Performance Pay,Union Bargaining and Within‐Firm Wage Inequality*

Theory predicts that performance pay boosts wage dispersion. Workers retain a share of individual productivity shocks and high‐efficiency workers receive compensation for greater effort. Collective bargaining can mitigate the effect of performance pay on wage inequality by easing monitoring of common effort standards and group‐based pay schemes. Analyses of longitudinal employer–employee data show that the introduction of performance‐related pay raises wage inequality in non‐union firms, but not in firms with high union density. Although performance‐related pay appears to be on the rise, the overall impact on wage dispersion is likely to be small, particularly in European countries with influential unions.     

Feedback and Motivation in Dynamic Tournaments

We investigate the choice to conduct interim performance evaluations in a dynamic tournament. When a worker's ability does not influence the marginal benefit of effort, the choice depends on the shape of the cost of effort function. When effort and ability are complementary, feedback has several competing effects: it informs workers about their relative position in the tournament (evaluation effect) as well as their relative productivity (motivation effect) and it creates signal‐jamming incentives to exert effort prior to the performance evaluation. These effects suggest a tradeoff of performance feedback between evaluation and motivation which is in accordance with organizational behavior research and performance appraisal practices.     

Promotion Tournaments and Individual Performance Pay

We analyze the optimal combination of promotion tournaments and linear individual performance pay in an employment relationship. An agent's effort is nonobservable and he has private information about his suitability for promotion. Thus, the two incentive schemes need to be combined to serve both incentive and selection purposes. If harder working agents respond less to intensified effort incentives, we find that the principal puts less emphasis on individual performance pay when selection becomes more important. Thus, we provide a possible explanation as to why, in practice, individual performance pay is less prevalent than promotion‐based incentives.     

Worker autonomy and performance: Evidence from a real-effort experiment

Worker flexibility in effort allocation is a crucial factor for productivity and optimal job design. This paper runs a real-effort experiment that manipulates both the degree and type of autonomy individuals have in scheduling their effort, and it examines the causal effects of these manipulations on final performance. The main findings come from comparing subjects with different levels of cognitive ability. Using individual data on scheduling decisions, I find significant baseline differences in performance and effort-allocation strategies between high- and low-cognitive ability subjects. Moreover, the experiment shows that high-ability individuals reach higher performance when they have full scheduling flexibility while limiting any task-ordering possibility increases the performance of low-ability individuals. Overall, this paper provides new and robust evidence on the importance of cognitive ability in explaining effort-allocation decisions, and it identifies job design interventions to increase the performance of high- and low-ability workers.     

Performance Pay and Offshoring

In this paper, we construct a North–South general equilibrium model of offshoring, highlighting the nexus among endogenous effort‐based labor productivity and the structure of wages. Offshoring is modeled as international transfer of management practices and production techniques that allow Northern firms to design and implement performance compensation contracts. Performance–pay contracts address moral hazard issues stemming from production uncertainty and unobserved worker effort. We find that worker effort augments productivity and compensation of those workers assigned to more offshorable tasks. An increase in worker effort in the South, caused by a decline in offshoring costs, an increase in worker skill, or a decline in production uncertainty in the South, increases the range of offshored tasks and makes workers in the North and South better off. An increase in Southern labor force increases the range of offshored tasks, benefits workers in the North, and hurts workers in the South. International labor migration from low‐wage South to high‐wage North shrinks the range of offshored tasks, makes Northern workers worse off and Southern workers (emigrants and those left behind) better off. Higher worker effort in the North, caused by higher worker skills or lower degree of production uncertainty, decreases the range of offshored tasks and benefits workers in the North and South.     

Assessing job crafting competencies to predict tradeoffs between competing outcomes

We introduce the job crafting competency construct and apply it to predict tradeoffs between competing outcomes that are inherent in job crafting, like performance and well-being or engagement and withdrawal. Job crafting competencies are the clusters of individual knowledge, skills, and abilities that are necessary to achieve personal objectives through effective job crafting problem-solving. We create a framework of job crafting competencies consisting of comprehensive/simplistic heuristic information use and approach/avoidance problem-solving skills. In Study 1, we operationalize competencies as profiles demonstrated through an aptitude-oriented assessment that predicts differences in outcomes. Five distinct profiles emerged in a sample of 174 workers. The high-volume analytic problem-solving profile was associated with higher performance and strain, while the ambivalent acquiescence profile was associated with lower performance and strain. The practical problem-solving profile minimized tradeoffs between performance and strain. Rapid problem-solving and low-volume analytic problem-solving profiles were variants in between these other patterns. Study 2 used a survey of 323 workers to support the uniqueness of the five competencies, and their relationships with approach/avoidance job crafting, engagement, and withdrawal. The research identifies a new job crafting individual difference (job crafting competencies) to delineate outcomes and tradeoffs according to unique competency profiles.     

Incentive compatible reward schemes for labour-managed firms

We consider a simple case of team production, where a set of workers have to contribute a single input (say labour) and then share the joint output amongst themselves. Different incentive issues arise when the skills as well as the levels of effort expended by workers are not publicly observable. We study one of these issues in terms of a very simple model in which two types of workers, skilled and unskilled, supply effort inelastically. Thus, we assume away the problem of moral hazard in order to focus on that of adverse selection. We also consider a hierarchical structure of production in which the workers need to be organised in two tiers. We look for reward schemes which specify higher payments to workers who have been assigned to the top-level jobs when the principal detects no lies, distribute the entire output in all circumstances, and induce workers to revel their true abilities. We contemplate two scenarios. In the first one, each individual worker knows only her own type, while in the second scenario each worker also knows the abilities of all other workers. Our general conclusion is that the adverse selection problem can be solved in our context. However, the range of satisfactory reward schemes depends on the informational framework.     

政府行为对农民工市民化的影响研究——基于博弈论视角

通过构建中央政府、地方政府、农民工三个主体三阶段的完全信息动态博弈模型,对农民工市民化进程中的政府行为与个人行为进行博弈分析,发现不同地区不同时期的博弈均衡解是不同的,博弈均衡(阻碍,阻碍,不成为市民)在我国长期占主导地位,从而导致了农民工市民化进程缓慢。农民工市民化发展缓慢的直接原因是中央政府、地方政府和农民工三个主体利益的不一致,根本原因却是财政分权背景下中央政府与地方政府的财权和事权的严重不对等以及中央政府对地方政府以GDP为核心的政绩考核方式。     

Determination of general equilibrium with incomplete markets and default penalties

This paper is concerned with the existence and computation of general equilibrium with incomplete asset markets and default. Due to the incompleteness of asset markets, the excess demand functions are typically not continuous at prices and delivery rates for which the assets have redundant nominal deliveries. This discontinuity results in a serious problem for the existence and computation of general equilibrium. We show that this problem can be resolved by replacing the nominal delivery matrix with a constant-rank one and restricting the macro variables in a subset of the domains. With this approach, the economies with incomplete markets and default penalties can be analyzed with differentiable homotopy techniques, and thus in the same framework as standard general equilibrium models. As a by-product, the existence of equilibrium is ensured for generic economies. Several computational examples demonstrate the effectiveness of the algorithm and show some quantitative features of equilibria in the model with default penalties.     

The generalized Stackelberg equilibrium of the all-pay auction with complete information

We characterize the equilibrium of the all-pay auction with general convex cost of effort and sequential effort choices. We consider a set of n players who are arbitrarily partitioned into a group of players who choose their efforts ‘early’ and a group of players who choose ‘late’. Only the player with the lowest cost of effort has a positive payoff in any equilibrium. This payoff depends on his own timing vis-a-vis the timing of others. We also show that the choice of timing can be endogenized, in which case the strongest player typically chooses ‘late’, whereas all other players are indifferent with respect to their choice of timing. In the most prominent equilibrium the player with the lowest cost of effort wins the auction at zero aggregate cost. We thank Dan Kovenock and Luis C. Corchón for discussion and helpful comments. The usual caveat applies. Wolfgang Leininger likes to express his gratitude to Wissenschaftszentrum Berlin (WZB) for its generous hospitality and financial support.     

Happy workers value effort,sad workers value reward

Why do various workers exhibit dissimilar motivational levels and performance results within the same incentive systems? According to expectancy theory, this might result from distinct evaluations of whether those rewards deserve corresponding effort. We proposed and verified that affective states influence the valuation of effort and reward. We concluded that happy people are likely to exert efforts for future rewards and sad people tend to seek rewards without extra effort. Our finding can explain divergent employee reactions to the same incentive programme. Our results provide an explanation for the finding that happy workers are more productive than sad workers. These results have crucial implications for human resource management theory and practice.     

Beyond bureaucracy? Work organization in call centres

Call centres are a rapidly growing, IT-based channel for service and sales delivery, particularly in the financial services and telecom industries. Although little research has been undertaken on the human resource aspects of call centres, two contrasting images are emerging. The first emphasizes the bureaucratic, constraining nature of these work settings, while the second image points towards worker empowerment characteristic of knowledge-intensive settings. Which of these two images more faithfully portrays the nature of work organization in call centres is the subject of our paper. Drawing on qualitative research undertaken in six call centres and a survey of front-line workers, we show that elements of both models coexist and that a hybrid model predominates. The theoretical basis for this contention, and its institutionalization as mass customized bureaucracy, lies in management's on-going attempts to reconcile two conflicting principles: standardization of processes and customization of products. The paper also explores, as key consequences of mass customized bureaucracy, front-line workers' satisfaction with various facets of their job and their overall job satisfaction, in addition to discretionary work effort. Only in relation to job security and co-worker relations could front-line workers be considered satisfied. Overall, these employees were ambivalent in their responses. They were however more likely to give more discretionary work effort than indicated by their extent of satisfaction. We conclude that, although the existing pattern of work organization may be superior to more bureaucratic forms, it is by no means ideal from the standpoint of either front-line workers or management.     

Consequences of self-employment for women and men in the United States

Many self-employed workers return to the wage and salaried sector of the labor market after some time. It is possible that the self-employment spell will lead to lower earnings or earnings growth upon return, due to depreciation of firm or sector-specific human capital. Using longitudinal data from the National Longitudinal Survey of Young Women (NLS), this paper examines the effects of spells of self-employment on the future wage and salary sector earnings of male and female workers in the United States. The results indicate substantial penalties arise for women, in terms of returns to experience, while there is little or no impact for men.     

Shared values make a difference: An empirical test of corporate culture

Is the recent popular management literature on corporate culture and cultural values just a passing fad or is it highlighting some fundamental organizational realities? The results from a recent nationwide survey of American managers shows, we are convinced, that clearly articulated organizational values do make a significant difference in the lives of employees, as well as in their organization's performance. This article is an effort to integrate this broad-based data on individual managers' values with the reported experience of successful organizations that pay careful attention to their culture. It also offers ideas on how human resource managers can facilitate the alignment of personal and organizational values.     

A Multiple‐Group Analysis of Associations Between Emotional Exhaustion and Supervisor‐Rated Individual Performance: Temporary Versus Permanent Call‐Center Workers

This study investigates whether contract type (temporary versus permanent employment) moderates the relationship between emotional exhaustion and supervisor‐rated individual performance. Most temporary workers desire permanent employment, and this may drive them to uphold performance also when strained. This hypothesis was tested with multiple‐group analysis in a sample of 430 call‐center operators from five Portuguese organizations from different sectors. The results show that emotional exhaustion related negatively to supervisor‐rated individual performance among permanent workers, but not among temporary workers. Our conclusion is that the relationship between emotional exhaustion and supervisor‐rated individual performance is conditional upon contract type. © 2014 Wiley Periodicals, Inc.     

Subsidizing low-skilled jobs in a dual labor market

We introduce a matching model that allows for classical and frictional unemployment. The labor market is dual featuring low-skilled and high-skilled workers and simple and complex jobs. Simple jobs pay a minimum wage, while wages in the complex jobs are determined by Nash bargaining. Opportunities for low-skilled workers are limited to simple jobs; while high-skilled unemployed can apply for both types of jobs, and thereby can accept to be downgraded. We analyze the outcomes of simple job subsidy policies assuming that government budget is balanced through taxes on occupied workers. We first give conditions for the existence and uniqueness of a steady-state equilibrium and we then analyze the effects of different fiscal instruments. We show that in this set-up, increasing simple job subsidies does not necessarily reduce low-skilled unemployment or unemployment spells. By introducing heterogeneous skills and possible downgrading of the high-skilled workers, we show that the effectiveness of such policies in reducing the classical unemployment is decreasing. In fact, any additional classical unemployed re-entering the job market is accompanied by an increasing number of high-skilled workers downgrading to low-skilled jobs. We calibrate the model on French labor market data. It is found that for five low-skilled workers leaving classical unemployment, two high-skilled workers are downgraded.