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Discretion, Productivity, and Work Satisfaction

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  • Bartling, Björn
  • Fehr, Ernst
  • Schmidt, Klaus M.

Abstract

In Bartling, Fehr and Schmidt (2012) we show theoretically and experimentally that it is optimal to grant discretion to workers if (i) discretion increases productivity, (ii) workers can be screened by past performance, (iii) some workers reciprocate high wages with high effort and (iv) employers pay high wages leaving rents to their workers. In this paper we show experimentally that the productivity increase due to discretion is not only sufficient but also necessary for the optimality of granting discretion to workers. Furthermore, we report representative survey evidence on the impact of discretion on workers’ welfare, confirming that workers earn rents.

Suggested Citation

  • Bartling, Björn & Fehr, Ernst & Schmidt, Klaus M., 2012. "Discretion, Productivity, and Work Satisfaction," Discussion Papers in Economics 14193, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenec:14193
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    References listed on IDEAS

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    1. Bjorn Bartling & Ernst Fehr & Klaus M. Schmidt, 2012. "Screening, Competition, and Job Design: Economic Origins of Good Jobs," American Economic Review, American Economic Association, vol. 102(2), pages 834-864, April.
    2. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    3. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 437-459.
    4. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
    5. Rosen, Sherwin, 1987. "The theory of equalizing differences," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 12, pages 641-692, Elsevier.
    6. Casey Ichniowski & Kathryn Shaw, 2003. "Beyond Incentive Pay: Insiders' Estimates of the Value of Complementary Human Resource Management Practices," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 155-180, Winter.
    7. Morris M. Kleiner & Richard B. Freeman, 2000. "Who Benefits Most from Employee Involvement: Firms or Workers?," American Economic Review, American Economic Association, vol. 90(2), pages 219-223, May.
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    Cited by:

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    4. Diane Pelly, 2023. "Worker Well-Being and Quit Intentions: Is Measuring Job Satisfaction Enough?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 169(1), pages 397-441, September.
    5. Roşca Vlad I., 2022. "Person-Job Fit and Subjective Underemployment in Multinational Companies," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 16(1), pages 981-991, August.
    6. Lea Cassar, 2014. "Optimal contracting with endogenous project mission," ECON - Working Papers 150, Department of Economics - University of Zurich, revised Oct 2014.
    7. Awan, Ashar & Hamdani, Nisar, 2015. "Achieving Job Satisfaction through Spirituality: A Case Study of Muslim Employees," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 1(1), pages 119-152.
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    More about this item

    JEL classification:

    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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