DO WAGE CUTS DAMAGE WORK MORALE? EVIDENCE FROM A NATURAL FIELD EXPERIMENT

Employment contracts are often incomplete, leaving many responsibilities subject to workers' discretion. High work morale is therefore essential for sustaining voluntary cooperation and high productivity in firms. We conducted a field experiment to test whether workers reciprocate wage cuts and raises with low or high work productivity. Wage cuts had a detrimental and persistent impact on productivity, reducing average output by more than 20%. An equivalent wage increase, however, did not result in any productivity gains. The results from an additional control experiment with high monetary performance incentives demonstrate that workers could still produce substantially more output, leaving enough room for positive reactions. Altogether, these results provide evidence consistent with a model of reciprocity, as opposed to inequality aversion.     

Pathways to productivity improvement

A study of productivity in the Machine Tool industry has just been published by the Engineering Employers Federation (EEF). As a member of the Productivity Steering Group, information was available to one of the authors, in an unusually detailed and validated form for the twenty or so individual companies, (though they remain anonymous). It was thought worthwhile to apply methods developed in the Economics and Statistics Department of British Aerospace to this data in order to give pointers to the factors explaining productivity differences. The particular methods referred to were those of the Diagnostic Chart, though considerably simplified to match the data available, and multiple regression analysis. Particular care is necessary in applying the latter technique in productivity analysis if spurious results are to be excluded. The conclusions were as follows: the most favoured path to improved productivity is via increased turnover; changes in productivity are reflected mainly in changes in the ‘profit’ element of value added rather than in the labour cost element; the major factor distinguishing low from high productivity companies is an excess of the manual work force in relation to turnover; increased fixed assets favours increased labour productivity; increased commitment to R & D favours increased labour productivity; these conclusions are, of course, deduced from a study of the machine tool industry in particular, but may well be of applicability to other industries.     

Cellular Bucket Brigades on U‐Lines with Discrete Work Stations

It is challenging to maximize and maintain productivity of a U‐line with discrete stations under the impact of variability. This is because maximizing productivity requires assigning workers to suitable tasks and maintaining productivity requires sufficient flexibility in task assignment to absorb the impact of variability. To achieve this goal, we propose an operating protocol to coordinate workers on the U‐line. Under the protocol the system can be configured such that its productivity is maximized. Workers are allowed to dynamically share work so that the system can effectively absorb the impact of variability. Analysis based on a deterministic model shows that the system always converges to a fixed point or a period‐2 orbit. We identify a sufficient condition for the system to converge to the fixed point. Increasing the number of stations improves productivity only under certain circumstances. The improvement is most significant when the number of stations in each stage increases from one to two, but further dividing the U‐line into more stations has diminishing return. Simulations based on random work velocities suggest that our approach significantly outperforms an optimized, static work allocation policy if variability in velocity is large.     

Cross‐Training with Imperfect Training Schemes

Cross‐training workers is one of the most efficient ways of achieving flexibility in manufacturing and service systems for increasing responsiveness to demand variability. However, it is generally the case that cross‐trained employees are not as productive on a specific task as employees who were originally trained for that task. Also, the productivity of the cross‐trained workers depends on when they are cross‐trained. In this work, we consider a two‐stage model to analyze the effects of variations in productivity levels on cross‐training policies. We define a new metric called achievable capacity and show that it plays a key role in determining the structure of the problem. If cross‐training can be done in a consistent manner, the achievable capacity is not affected when the training is done, which implies that the cross‐training decisions are independent of the opportunity cost of lost demand and are based on a trade‐off between cross‐training costs at different times. When the productivities of workers trained at different times differ, there is a three‐way trade‐off between cross‐training costs at different times and the opportunity cost of lost demand due to lost achievable capacity. We analyze the effects of variability and show that if the productivity levels of workers trained at different times are consistent, the decision maker is inclined to defer the cross‐training decisions as the variability of demand or productivity levels increases. However, when the productivities of workers trained at different times differ, an increase in the variability may make investing more in cross‐training earlier more preferable.     

Careers and productivity in an internal labor market

This paper contributes to the existing literature by evaluating the effects of age and tenure on careers and productivity within an internal labor market. We use the administrative personnel records of a long balanced panel of blue-collar workers from a manufacturing firm in Germany with a distinct classification of wage groups and unique information on workers’ productivity in form of suggestions for productivity improvement. Using robust locally weighted regression, our main findings suggest that the probability of promotion is highest for younger workers and early in the career. Older workers are less likely to be promoted. The likelihood of making a rewarded suggestion is inversely u-shaped with respect to tenure and age. Furthermore, workers’ ability and firm-specific human capital determine the workers’ careers and productivity.     

Interruption and Forgetting in Knowledge‐Intensive Service Environments

An increasing barrier to productivity in knowledge‐intensive work environments is interruptions. Interruptions stop the current job and can induce forgetting in the worker. The induced forgetting can cause re‐work; to complete the interrupted job, additional effort and time is required to return to the same level of job‐specific knowledge the worker had attained prior to the interruption. This research employs primary observational and process data gathered from a hospital radiology department as inputs into a discrete‐event simulation model to estimate the effect of interruptions, forgetting, and re‐work. To help mitigate the effects of interruption‐induced re‐work, we introduce and test the operational policy of sequestering, where some service resources are protected from interruptions. We find that sequestering can improve the overall productivity and cost performance of the system under certain circumstances. We conclude that research examining knowledge‐intensive operations should explicitly consider interruptions and the forgetting rate of the system's human workers or models will overestimate the system's productivity and underestimate its costs.     

Night work and symptoms of anxiety and depression among nurses: A longitudinal study

Over the last few decades, night work has been found to be associated with negative somatic consequences; however, there is less knowledge about its impact on mental health. In a sample of 633 Norwegian nurses, we investigated by means of latent growth curve modelling whether different work schedules predicted differences in baseline values of anxiety and depressive symptoms, and trajectories of these over a two-year span. All participants completed the Hospital Anxiety and Depression Scale as part of a larger survey conducted during the winters of 2009, 2010 and 2011. The results revealed that night workers and nurses who changed from day work to night work during the study period did not differ from day workers either in terms of baseline symptoms of anxiety or depression, or in terms of trajectories of these symptoms. However, nurses who changed from night work to day work reported a significant decrease in symptoms of both anxiety and depression over time compared to day workers. Furthermore, supporting previous work, languidity was related to higher anxiety and depression and hardiness to lower levels of those symptoms. Possible mechanisms underlying the results are discussed.     

Social Connections and Incentives in the Workplace: Evidence From Personnel Data

We present evidence on the effect of social connections between workers and managers on productivity in the workplace. To evaluate whether the existence of social connections is beneficial to the firm's overall performance, we explore how the effects of social connections vary with the strength of managerial incentives and worker's ability. To do so, we combine panel data on individual worker's productivity from personnel records with a natural field experiment in which we engineered an exogenous change in managerial incentives, from fixed wages to bonuses based on the average productivity of the workers managed. We find that when managers are paid fixed wages, they favor workers to whom they are socially connected irrespective of the worker's ability, but when they are paid performance bonuses, they target their effort toward high ability workers irrespective of whether they are socially connected to them or not. Although social connections increase the performance of connected workers, we find that favoring connected workers is detrimental for the firm's overall performance.     

The Contribution of Work Representation to Solving the Governance Structure Problem

The aim of this paper is to explain in what ways work representation may contribute to an efficient governance structure. The insights from institutional economic theories will be applied to two different kinds of employee participation, namely trade unions and works councils. From the discussion it follows that the latter may be better equipped than the former to play an effective role in corporate decision-making, owing to its specific institutionalisation. The paper concludes with the finding that works councils could fulfil an important economic function, by protecting the interests of the employees as well as those of the shareholders.Several agency problems can be solved. By giving the workers consultation and codetermination rights, this will reduce their dependence on unilateral decisions by the management and may stimulate them to be more cooperative, leading to greater productivity and less monitoring costs. By giving the workers information rights, the management becomes more disciplined as well. Because contrary to trade unions the works councils usually do not determine the terms of employment, the owners of the firm do not need to fear that the employees will be able to extract a portion of the firm's profits.     

The Baumol Gap Revisited. An econometric analysis of the productivity differential between U.K. manufacturing and service firms, 1982–1989

The gap in productivity growth between manufacturing and service sectors is analyzed at company level using a panel of 328 British companies. This paper evaluates differences in the rate of growth of technological progresss (“Baumol gap”) in manufacturing and service companies, taking full account of the impact of changes in market competition, union recognition and financial position of firms. The empirical results suggest: (i) the gap in total factor productivity is significant and negative for distribution, lodging and catering sectors, positive but less significant for transport and communication sectors; (ii) the technological gap is higher than the gap in labour productivity; (iii) the gap can be attributed to technological factors, and it is invariant to the use of firm–level variables that capture effects on workers and managers effort; (iv) the estimate of total factor productivity growth in manufacturing and services is slightly influenced by these variables.     

The Role of Profit Sharing in Dual Labour Markets with Flexible Outsourcing

We combine profit sharing for high‐skilled workers and outsourcing of low‐skilled tasks in a partly imperfect dual domestic labour market, which means that only low‐skilled labour is represented by a labour union. In that framework we analyse how the implementation of profit sharing for high‐skilled workers influences the amount of outsourcing and the labour market outcome for low‐skilled worker. By doing this, we use some specific assumptions, e.g. exponentially increasing outsourcing costs or the wage for low‐skilled workers will be determined by a union whereas the wage for high‐skilled workers is given. Assuming that low‐skilled labour and outsourcing are interchangeable we show that profit sharing has a positive effect on the wage for low‐skilled workers and helps to decrease wage dispersion. However, under these circumstances, profit sharing enhances outsourcing. Concerning the employment effects for high‐ and low‐skilled workers, we show that there is an employment reducing effect due to higher wages for low‐skilled work, which can be offset by higher productivity of highly skilled workers, as the domestic labour inputs complement each other.     

The relationship between presenteeism and job satisfaction: A mediated moderation model using work engagement and perceived organizational support

Research on presenteeism has largely focused on its prevalence, determinants and consequences on the health of both employees and organizations. To date, few studies have examined the influence of presenteeism on workers’ attitudinal and motivational responses. Based on the Effort–Recovery Theory, this study evaluates the mediating effect of work engagement in the relationship between presenteeism and job satisfaction. Building on previous work, this study also proposes to consider perceived organizational support as a moderator of the work engagement–job satisfaction relationship. Presented in the form of a mediated moderation model, the results of bootstrapped regression analyses show three main results. First, presenteeism is negatively associated with work engagement and job satisfaction. Secondly, work engagement is one of the factors through which presenteeism influences job satisfaction. Thirdly, perceived organizational support moderates the association between work engagement and job satisfaction so that, at a low level of work engagement, feeling supported by the organization makes a difference on job satisfaction. Overall, this research is part of the limited number of studies that have focused on the interplay existing between presenteeism and its consequences in terms of job attitudes.     

乡镇企业产权改革、所有制结构及职工参与问题研究

运用改制企业及其职工问卷调查资料 ,本文研究表明:(1)县以上政府出于财政目标的需要 ,鼓励并主导了乡镇企业产权制度的改革 ,改革具有自上而下推动的特征 ,而并非完全像过去主流观点所认为的那样 ,改革完全是自下而上推动的结论;(2)地方 (社区 )政府、改制企业的原经营者、企业职工及社区全体居民在改革后具体企业产权模式的选择上 ,具有明显的鹰—鸽博弈特征 ,地方社区政府、改制企业的原经营者之间的博弈结果是改革后具体企业产权模式的选择的主要的决定力量。乡镇政府和企业经理共同控制了乡镇企业的改制 ,普通职工只有被动的参与权;(3)乡镇政府和原企业经理均无选择股份合作制的动力;(4)企业职工对于是否持股并不十分积极、其能否持股取决于多种因素;(5)职工对改制企业在激励机制、决策机制、管理机制等方面的进步给予积极的肯定;(6)股权结构对企业生产率影响不明显 ,它表明所有权结构只是生产率提高的必要条件 ,而非充要条件 ,它也不是改革最终走向“经营者持大股"的逻辑原因;(7)企业改制、特别是经营者持大股企业对就业、企业长期投资产生了积极影响 ,改制推进了企业经营水平、市场竞争力的提高。     

Attitudes,Expectations and Sharing

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Apology . Labour 19:4 801 .
Online publication date: 16‐Dec‐2005. Abstract. We explore the relationship between performance‐related pay and the attitudes and expectations of a representative sample of British workers. Our results suggest that employees who participate in productivity‐linked bonus schemes, discretionary bonus schemes, share ownership or profit sharing are more optimistic about future employment and pay and are generally more satisfied with their work environment. However, employees participating specifically in profit‐sharing schemes are less likely to work as hard as they can, ceteris paribus. This is an intriguing finding, insinuating as it does that group‐sharing schemes are unable to rout the temptation to free ride and thereby ensure a first best cooperative equilibrium.     

Role stress among Canadian white-collar workers

The incidence of various stressors at work and outside work was examined in a group of public service workers with a large Canadian federal government department. Workers were either in clerical, technical and supervisory ('officers'), or management positions. Measures of work stress included role stressors (load, insufficiency, conflict ambiguity and responsibility), as well as stress due to the physical environment. Both life events and daily hassles were included as measures of non-work stress. The consequences of stress were considered in terms of vocational, psychological, interpersonal, and physical strain, as well as in terms of job satisfaction and organizational commitment. Potential moderators of stress included social support and self-esteem. Among work stressors conflict, ambiguity and insufficiency were the more closely associated with vocational outcomes. MANCOVA followed by discriminant function analysis showed that clerical workers were distinguished by higher levels of insufficiency, officers by higher levels of conflict and the lowest levels of job satisfaction and organizational commitment, and managers by higher levels of perceived responsibility for others. The results are discussed in terms of social role theory.     

Unemployment and Retirement in a Model with Age‐specific Heterogeneity

This paper presents a model where young and old workers compete for one type of jobs in the presence of retirement opportunity. Within this framework, we show that increased retirement opportunities (such as a decrease of the retirement age) has most of the time a depressing impact on the unemployment rate. Indeed the number of vacancies posted by firms is influenced by the probability that an old worker is going into retirement. We show that the degree to which younger workers are influenced by retirement of older workers depends on the relative productivity of young and older workers. It is only when older workers are much more productive than young workers that retirement may benefit to unemployment.     

Occupational Upgrading and the Business Cycle

Many economics theories suggest that the assignment of workers to occupations changes over the business cycle: expansions allow workers to upgrade to occupations that pay higher wages and require more skill. This paper provides some empirical evidence from the USA that such upgrading does occur and that, as predicted, it has greater effects on less‐skilled individuals. Furthermore, the skill composition of new hires changes over the business cycle, even within occupations. Consistent with a job competition model, the education levels of new hires within occupations are higher when the unemployment rate is high and this effect is more pronounced in lower‐paying occupations. The changes in assignment imply that low‐skilled individuals suffer most from recessions in terms of occupation quality and unemployment. The results are consistent with employers responding to a greater supply of educated workers by increasing hiring standards, and so imply that the social return to education may be lower than the private return. However, the results are also consistent with more neo‐classical models of the labor market.     

Efficiency Wage,Fixed Employment Costs,and Dual Labour Markets

The standard efficiency wage‐based explanation of labour market dualism hinges on the existence of differences in monitoring across sectors. The paper proposes fixed employment costs as an alternative source of wage differentials for homogeneous workers. It shows that firms with larger fixed costs pay higher wages in order to elicit more effort from their workers, and tend to have higher capital/labour ratio and labour productivity. The model generates both involuntary unemployment and involuntary confinement in the secondary sector: high effort–high wage jobs are preferred to low effort–low wage jobs and either are preferred to unemployment. The proposed framework can also account for the various types of treatment of marginal jobs in primary sector firms envisaged by Doeringer and Piore (Internal Labour Markets and Manpower Analysis, 1971). In particular, an increase in fixed costs beyond a certain level may induce primary sector firms to restructure, segment production, and enter the secondary sector, thus converting their jobs into secondary jobs. From a welfare point of view, we cannot state in general the desirability of subsidizing fixed employment costs; however, we show that an employment subsidy financed by a wage tax is able to increase employment with no loss in terms of production.     

Parkinson,Peter and probability: Implications for productivity

Improving productivity and effectiveness in society and organizations is a need which is not being met satisfactorily in most countries. Goals of society and organizations are defined in circular and spiral terms, one leading to the other, as encouraging the development of individual capabilities, achieving greater effectiveness, attaining a better quality of life, and enhancing human dignity. Parkinson's Law, Peter's Principle and Robinson's Law (“in a bureaucracy, work alters upon advancement”) illustrate in satirical form many truths about why organizations and society are not increasing their levels of goal attainment. Clues for overcoming this adversity are the treatment of such laws as probability concepts to demonstrate that future performance of a specific organization cannot be predicted, and the recognition that unstated assumptions—we know how to apply accumulated knowledge and the research approach should be followed—need to be converted to much different explicit ones. Evidence demonstrating why this is so and what ought to be done is reviewed. A planning and design approach based on an orientation of purposes-target-results is presented, and some different change principles that result from the approach are described.     

Inept or Badly Matched? — Effects of Educational Mismatch in the Labor Market

Negative wage effects of educational mismatch have become a stylized fact. Whether these are explained by differences in unobserved productivity or poor matching is still to be answered conclusively. In an empirical analysis based on data from the German Socio‐Economic Panel and the International Adult Literacy Survey, a broad econometric strategy is applied to solve the problem of unobserved heterogeneity and reveal the mechanism underlying wage differences between matched and mismatched workers. Results show that wage differentials can be explained by a poor matching in the labor market, rejecting the hypothesis that mismatched workers compensate for unobserved productivity differences.