Discretion, Productivity, and Work Satisfaction
University of Zurich - Department of Economics Library
University of Zurich - Department of Economics
Klaus M. Schmidt
Ludwig-Maximilians-Universität Munich - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Centre for Economic Policy Research (CEPR)
June 21, 2012
In Bartling, Fehr and Schmidt (2012) we show theoretically and experimentally that it is optimal to grant discretion to workers if (i) discretion increases productivity, (ii) workers can be screened by past performance, (iii) some workers reciprocate high wages with high effort and (iv) employers pay high wages leaving rents to their workers. In this paper we show experimentally that the productivity increase due to discretion is not only sufficient but also necessary for the optimality of granting discretion to workers. Furthermore, we report representative survey evidence on the impact of discretion on workers’ welfare, confirming that workers earn rents.
Number of Pages in PDF File: 21
Keywords: high-performance work systems, wages, discretion, gift exchange, job satisfaction
JEL Classification: M5, J3working papers series
Date posted: June 30, 2012
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