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

  • Bogaard, Hein

    ()

    (George Washington University)

  • Svejnar, Jan

    ()

    (Columbia University)

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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File URL: http://ftp.iza.org/dp7800.pdf
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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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  17. Edward P. Lazear, 2000. "The Power of Incentives," American Economic Review, American Economic Association, vol. 90(2), pages 410-414, May.
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  23. Leslie E. Papke & Jeffrey M. Wooldridge, 1993. "Econometric Methods for Fractional Response Variables with an Application to 401(k) Plan Participation Rates," NBER Technical Working Papers 0147, National Bureau of Economic Research, Inc.
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  25. Ann P. Bartel, 2004. "Human Resource Management and Organizational Performance: Evidence from Retail Banking," ILR Review, Cornell University, ILR School, vol. 57(2), pages 181-203, January.
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  28. Cludia M. Buch, 1997. "Opening up for foreign banks: How Central and Eastern Europe can benefit," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(2), pages 339-366, November.
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