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Career Incentives And Employee Productivity In State-Owned Enterprises: Evidence From India

Author

Listed:
  • Tanisha Agarwal

    (The University of Texas at Austin)

  • Samarth Gupta

    (Ahmedabad University)

  • Kaushalendra Kishore

    (Centre for Advanced Financial Research and Learning (CAFRAL))

Abstract

State-owned enterprises (SOEs) are large and important organizations in many economies but suffer from low labour productivity IMF (2020). Can SOEs improve their labour by enhancing career concerns for their employees? We show that exogenous change in opportunities to influence career progression significantly improves the performance of employees of state-owned banks in India. In particular, we find that when banking employees get more exposure to senior management, who can influence their promotion decisions, they increase credit expansion on both intensive and extensive margins. Further, this expansion happens through increased productivity, and not costly factors such as liberal screening, lower interest rates or higher resource allocation. Our results show that reforms in performance review processes, which allow workers to signal effort to supervisors in state-owned firms, may yield substantial productivity gains

Suggested Citation

  • Tanisha Agarwal & Samarth Gupta & Kaushalendra Kishore, 2023. "Career Incentives And Employee Productivity In State-Owned Enterprises: Evidence From India," Working Papers 022274, Centre for Advanced Financial Research and Learning (CAFRAL).
    • Handle: RePEc:ris:cafral:022274
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    Keywords

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    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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