Measuring Indirect Effects of Unfair Employer Behavior on Worker Productivity - A Field Experiment

58 Pages Posted: 17 Nov 2017

See all articles by Matthias Heinz

Matthias Heinz

University of Cologne; Centre for Economic Policy Research (CEPR)

Sabrina Jeworrek

Halle Institute for Economic Research; Otto-von-Guericke-Universität Magdeburg

Vanessa Mertins

University of Vechta

Heiner Schumacher

KU Leuven - Faculty of Business and Economics (FEB)

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Cologne - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: November 2017

Abstract

We present a field experiment in which we set up a call-center to study how the productivity of workers is affected if managers treat their co-workers in an unfair way. This question cannot be studied in long-lived organizations since workers may change their career expectations (and hence effort) when managers behave unfairly towards co-workers. In order to rule out such confounds and to measure productivity changes of unaffected workers in a clean way, we create an environment where employees work for two shifts. In one treatment, we lay off parts of the workforce before the second shift. Compared to two different control treatments, we find that, in the layoff treatment, the productivity of the remaining, unaffected workers drops by 12 percent. We show that this result is not driven by peer effects or altered beliefs about the job or the managers' competence, but rather related to the workers' perception of unfair behavior of employers towards co-workers. The latter interpretation is confirmed in a survey among professional HR managers. We also show that the effect of unfair behavior on the productivity of unaffected workers is close to the upper bound of the direct effects of wage cuts on the productivity of affected workers. This suggests that the price of an employer's unfair behavior goes well beyond the potential tit-for-tat of directly affected workers.

Keywords: Fairness, field experiments., Gift exchange, labor markets, Layoffs

JEL Classification: C93, J50, J63

Suggested Citation

Heinz, Matthias and Jeworrek, Sabrina and Mertins, Vanessa and Schumacher, Heiner and Sutter, Matthias, Measuring Indirect Effects of Unfair Employer Behavior on Worker Productivity - A Field Experiment (November 2017). CEPR Discussion Paper No. DP12429. Available at SSRN: https://ssrn.com/abstract=3071061

Matthias Heinz (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Sabrina Jeworrek

Halle Institute for Economic Research ( email )

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Otto-von-Guericke-Universität Magdeburg ( email )

Universitätspl. 2
PSF 4120
Magdeburg, D-39106
Germany

Vanessa Mertins

University of Vechta ( email )

Driverstr. 22
Vechta, 49377
Germany

Heiner Schumacher

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Matthias Sutter

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

University of Cologne - Department of Economics

Cologne, 50923
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
98
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information