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Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm

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  • Bogaard, Hein

    ()
    (George Washington University)

  • Svejnar, Jan

    ()
    (Columbia University)

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    Abstract

    We exploit organizational reforms in a foreign-owned bank in Central-East Europe to study the implementation of modern HRM policies in an emerging market context. We have branch-level data and use our knowledge of the process that led to the adoption of the reforms to implement two estimators that address endogeneity bias in a complementary fashion: an IV approach and Generalized Propensity Score estimation. Our results show that some of the reforms had a positive impact on productivity, but they also underscore the risks of quantity-based incentives where quality is important.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7800.

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    Length: 51 pages
    Date of creation: Dec 2013
    Date of revision:
    Handle: RePEc:iza:izadps:dp7800

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    Related research

    Keywords: insider econometrics; endogeneity of HRM policies; incentives; foreign ownership; banking; Central and Eastern Europe;

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