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Flexible Workplace Practices and Labor Productivity

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  • Bauer, Thomas K.

    () (RWI)

Abstract

Using a German employer-employee matched panel data set this paper examines the effects of High Performance Workplace Systems (HPWSs) on labor productivity (defined as sales per worker) and labor efficiency (defined as the inverse of unit labor costs). The estimation results indicate that simple cross-sectional estimates of the effects of implementing HPWSs on labor productivity are biased downward due to unobserved time-invariant establishment effects and the endogeneity of the used measure for innovative workplace practices. The latter bias appears to be quantitatively more important. Results from estimating a correlated random coefficient model further suggest that a potential bias in the 2SLS-estimates due to self-selection seems to be negligible. The estimated effects of HPWSs on labor productivity are economically important and rising over time. However, corresponding positive effects of HPWSs on labor efficiency occur only in the long run. Finally, due to rising wages associated with the adoption of HPWSs, the effects of these systems on labor efficiency are smaller than the corresponding effects on labor productivity.

Suggested Citation

  • Bauer, Thomas K., 2003. "Flexible Workplace Practices and Labor Productivity," IZA Discussion Papers 700, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp700
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    File URL: http://ftp.iza.org/dp700.pdf
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    Citations

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    Cited by:

    1. Annalisa Cristini & Tor Eriksson & Dario Pozzoli, 2013. "High-Performance Management Practices and Employee Outcomes in Denmark," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(3), pages 232-266, July.
    2. repec:iab:iabzaf:v:41:i:2/3:p:259-285 is not listed on IDEAS
    3. Arrantz-Aperte, Laura & Heshmati, Almas, 2003. "Determinants of Profit Sharing in the Finnish Sector," Working Papers 492, Hanken School of Economics.
    4. Enrico Marelli & Marcello Signorelli, 2010. "Employment, productivity and models of growth in the EU," International Journal of Manpower, Emerald Group Publishing, vol. 31(7), pages 732-754, October.
    5. Laura Arranz-Aperte & Almas Heshmati, 2004. "Determinants of Profit Sharing in the Finnish Corporate Sector," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 39(1), pages 55-79, January.
    6. Annalisa Cristini & Alessandro Gaj & Riccardo Leoni, 2008. "Direct and Indirect Complementarity between Workplace Reorganization and New Technology," Rivista di Politica Economica, SIPI Spa, vol. 98(2), pages 87-117, March-Apr.
    7. Maciej Bukowski & Grzegorz Koloch & Piotr Lewandowski & Anna Baranowska & Iga Magda & Arkadiusz Szydlowski & Jacek Bielinski & Magdalena Bober & Malgorzata Sarzalska & Julian Zawistowski, 2008. "Employment in Poland 2007. Security on a Flexible Labour Market," Books and Reports published by IBS, Instytut Badan Strukturalnych, number zwp2007 edited by Maciej Bukowski.
    8. Fibla Gasparín, Ma. Teresa, 2010. "Productivity in southern European small firms: When and how work organization complements process innovation," Working Papers 2072/179600, Universitat Rovira i Virgili, Department of Economics.
    9. Riccardo Leoni, 2013. "Organization of work practices and productivity: an assessment of research on world- class manufacturing," Chapters,in: Handbook of Economic Organization, chapter 17 Edward Elgar Publishing.
    10. Kirchner, Stefan & Oppen, Maria & Bellmann, Lutz, 2008. "Zur gesellschaftlichen Einbettung von Organisationswandel : Einführungsdynamik dezentraler Organisationsstrukturen," IAB Discussion Paper 200837, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. Annalisa Cristini & Dario Pozzoli, 2010. "Workplace practices and firm performance in manufacturing: A comparative study of Italy and Britain," International Journal of Manpower, Emerald Group Publishing, vol. 31(7), pages 818-842, October.
    12. Hans K. Hvide & Tore Leite, 2003. "A Theory of Capital Structure with Strategic Defaults and Priority Violations," Finance 0311003, EconWPA.
    13. Bauer, Thomas K. & Bender, Stefan, 2004. "Technological change, organizational change, and job turnover," Labour Economics, Elsevier, vol. 11(3), pages 265-291, June.
    14. repec:iab:iabzaf:v:39:i:2:p:201-233 is not listed on IDEAS
    15. Bellmann, Lutz & Pahnke, André, 2006. "Auswirkungen organisatorischen Wandels auf die betriebliche Arbeitsnachfrage (Effects of organisational change on firms' demand for labour)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 39(2), pages 201-233.
    16. Bellmann, Lutz & Cornelißen, Thomas & Hübler, Olaf & Pahnke, André, 2008. "Betriebliche Reorganisation, Entlohnung und Beschäftigungsstabilität (Organisational change, wages and job stability)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 41(2/3), pages 259-285.
    17. Arvanitis, Spyros & Loukis, Euripidis N., 2009. "Information and communication technologies, human capital, workplace organization and labour productivity: A comparative study based on firm-level data for Greece and Switzerland," Information Economics and Policy, Elsevier, vol. 21(1), pages 43-61, February.
    18. Zwick, Thomas, 2003. "Works Councils and the Productivity Impact of Direct Employee Participation," ZEW Discussion Papers 03-47, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    19. Beckmann, Michael & Armbruster, Kathrin, 2010. "Business environment, managerial strategies, and the allocation of decision-making authorities in Swiss Firms," Working papers 2010/06, Faculty of Business and Economics - University of Basel.

    More about this item

    Keywords

    linked-employer-employee data set; high performance workplace organization; instrumental variables; correlated random coefficient model;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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