Discretion, Productivity, and Work Satisfaction
21 Pages Posted: 30 Jun 2012
Date Written: 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.
Keywords: high-performance work systems, wages, discretion, gift exchange, job satisfaction
JEL Classification: M5, J3
Suggested Citation: Suggested Citation