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The Economic Payoff of Creating Good Job Conditions: Theory and Evidence from Latin America

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  • Chaparro, Juan
  • Lora, Eduardo

Abstract

Based on Akerlof and Kranton (2005), who argue that group identity and social norms influence individual preferences towards work effort, a model is developed to understand why firms create good job conditions, taking into account the cost of implementing them and their impact on wages and productivity. Then, using individual-level data from the Gallup World Poll for 18 Latin American countries, the main predictions of the model are tested using propensity score matching. We find a positive link between good job conditions, workers’ labor income and productivity when there are several simultaneous signals of a good work environment. We conclude that there is a positive payoff of investing in good job conditions for both workers and firms.

Suggested Citation

  • Chaparro, Juan & Lora, Eduardo, 2014. "The Economic Payoff of Creating Good Job Conditions: Theory and Evidence from Latin America," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169810, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:169810
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    Keywords

    Job Conditions; Human Resources Management; Labor Productivity; Identity Economics; Propensity Score Matching; Latin America; International Development; Labor and Human Capital; Productivity Analysis; J24; J64; M12; M54; O54;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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