Time is (Not) Money - Incentive Effects of Granting Leisure Time
52 Pages Posted: 15 Oct 2019 Last revised: 4 Dec 2020
Date Written: October 4, 2019
I study how a gift of more leisure time affects employees’ performance in a real-effort laboratory experiment. Results show that a monetary gift of a 75% wage increase does not alter employee’s performance, compared to a baseline of no gift. A comparable gift of more leisure time, however, significantly increases employee performance by 25%. The mechanism for this is a significant reduction in on-the-job leisure (Internet) consumption by 45%. An online survey experiment among human resource managers provides some external validity. Managers anticipate the mechanism of on-the-job leisure reduction and point to possible further advantages of leisure time gifts over monetary gifts. This study contributes to the design of informal management controls in organizations and shows the influence of on-the-job leisure as distortionary behavior on the effective working time.
Keywords: employee motivation, non-monetary rewards, gift exchange, laboratory experiment, real-effort, time-off, informal controls
JEL Classification: C91, J33, M52
Suggested Citation: Suggested Citation