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Optimally Designing Purpose and Meaning at Work

Author

Listed:
  • Antonio Cabrales
  • Esther Hauk

Abstract

Many workers value purpose and meaning in their jobs alongside income, and firms need to align these preferences with profit goals. This paper develops a dynamic model in which firms invest in ”purpose” to enhance job meaning and motivate effort. Workers, who differ in productivity, choose both productive and socialization effort, gaining utility from income and meaning. Purpose accumulates over time through firm investment and interacts with socialization to generate meaning, which boosts productivity. Firms invest in purpose only insofar as it raises profits. We characterize the unique equilibrium, including steady state and transition dynamics. Meaning and purpose rise with the importance workers place on meaning and with firm’s patience, but fall with depreciation and socialization costs. The relationship with workers’ share of output is nonmonotonic. We also show that some intermediate level of heterogeneity in skills is best for performance. Compared to a worker-owned firm, profit-maximizing firms underinvest in purpose, highlighting a misalignment between firm incentives and worker preferences. The model provides insight into when and why firms adopt purpose-driven practices and underscores the role of diversity in fostering meaning at work.

Suggested Citation

  • Antonio Cabrales & Esther Hauk, 2026. "Optimally Designing Purpose and Meaning at Work," CESifo Working Paper Series 12381, CESifo.
    • Handle: RePEc:ces:ceswps:_12381
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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