IDEAS home Printed from https://ideas.repec.org/p/syd/wpaper/2123-9543.html
   My bibliography  Save this paper

Competitive Screening of a Heterogeneous Labor Force and Corporate Teamwork Attitude

Author

Listed:
  • Tymula, Agnieszka

Abstract

The aim of this paper is to analyze the impact of competition on the structure of incentive schemes, workforce composition and the degree of cooperation within firms. We show that in equilibrium high-ability workers, in order to distinguish themselves from the less able workforce, choose the incentive schemes that strongly rely on their own as well as their teammates' performance. They work harder on their own task and are more team-oriented than less skilled workers. Our paper stresses the sorting role of the incentives and provides a rationale for the emergence of different corporate teamwork practices.

Suggested Citation

  • Tymula, Agnieszka, 2013. "Competitive Screening of a Heterogeneous Labor Force and Corporate Teamwork Attitude," Working Papers 2013-18, University of Sydney, School of Economics.
  • Handle: RePEc:syd:wpaper:2123/9543
    as

    Download full text from publisher

    File URL: http://econ-wpseries.com/2013/201318.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ittner, Christopher D. & Lambert, Richard A. & Larcker, David F., 2003. "The structure and performance consequences of equity grants to employees of new economy firms," Journal of Accounting and Economics, Elsevier, vol. 34(1-3), pages 89-127, January.
    2. Kocher, Martin & Strau[ss], Sabine & Sutter, Matthias, 2006. "Individual or team decision-making--Causes and consequences of self-selection," Games and Economic Behavior, Elsevier, vol. 56(2), pages 259-270, August.
    3. Paarsch, Harry J & Shearer, Bruce, 2000. "Piece Rates, Fixed Wages, and Incentive Effects: Statistical Evidence from Payroll Records," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 59-92, February.
    4. Edward P. Lazear, 2000. "The Power of Incentives," American Economic Review, American Economic Association, vol. 90(2), pages 410-414, May.
    5. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
    6. Ernst Fehr & Klaus M. Schmidt, 2004. "Fairness and Incentives in a Multi‐task Principal–Agent Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(3), pages 453-474, October.
    7. Thomas Dohmen & Armin Falk, 2011. "Performance Pay and Multidimensional Sorting: Productivity, Preferences, and Gender," American Economic Review, American Economic Association, vol. 101(2), pages 556-590, April.
    8. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    9. Roland Bénabou & Jean Tirole, 2016. "Bonus Culture: Competitive Pay, Screening, and Multitasking," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 305-370.
    10. Tor Eriksson & Sabrina Teyssier & Marie‐Claire Villeval, 2009. "Self‐Selection And The Efficiency Of Tournaments," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 530-548, July.
    11. Yeon-Koo Che & Seung-Weon Yoo, 2001. "Optimal Incentives for Teams," American Economic Review, American Economic Association, vol. 91(3), pages 525-541, June.
    12. Alexandre Mas & Enrico Moretti, 2009. "Peers at Work," American Economic Review, American Economic Association, vol. 99(1), pages 112-145, March.
    13. Grossmann, Volker, 2003. "Managerial Job Assignment and Imperfect Competition in Asymmetric Equilibrium," IZA Discussion Papers 738, Institute of Labor Economics (IZA).
    14. Gilles Saint-Paul, 2001. "On the Distribution of Income and Worker Assignment under Intrafirm Spillovers, with an Application to Ideas and Networks," Journal of Political Economy, University of Chicago Press, vol. 109(1), pages 1-37, February.
    15. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-328, March.
    16. Tzioumis, Konstantinos, 2008. "Why do firms adopt CEO stock options? Evidence from the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 100-111, October.
    17. Rafael Rob & Peter Zemsky, 2002. "Social Capital, Corporate Culture, and Incentive Intensity," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 243-257, Summer.
    18. Itoh, Hideshi, 1991. "Incentives to Help in Multi-agent Situations," Econometrica, Econometric Society, vol. 59(3), pages 611-636, May.
    19. Barton H. Hamilton & Jack A. Nickerson & Hideo Owan, 2003. "Team Incentives and Worker Heterogeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation," Journal of Political Economy, University of Chicago Press, vol. 111(3), pages 465-497, June.
    20. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 629-649.
    21. Michael Kosfeld & Ferdinand A. von Siemens, 2011. "Competition, cooperation, and corporate culture," RAND Journal of Economics, RAND Corporation, vol. 42(1), pages 23-43, March.
    22. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bannier, Christina E. & Feess, Eberhard & Packham, Natalie, 2014. "Incentive schemes, private information and the double-edged role of competition for agents," CFS Working Paper Series 475, Center for Financial Studies (CFS).
    2. Roland Bénabou & Jean Tirole, 2016. "Bonus Culture: Competitive Pay, Screening, and Multitasking," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 305-370.
    3. Kohei Daido & Takeshi Murooka, 2022. "The Provision of High-powered Incentives under Multitasking," Discussion Paper Series 242, School of Economics, Kwansei Gakuin University.
    4. Kohei Daido & Takeshi Murooka, 2022. "The Provision of High-powered Incentives under Multitasking," OSIPP Discussion Paper 22E005, Osaka School of International Public Policy, Osaka University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David J. Cooper & Krista Saral & Marie Claire Villeval, 2021. "Why Join a Team?," Management Science, INFORMS, vol. 67(11), pages 6980-6997, November.
    2. Michael Kosfeld & Ferdinand A. von Siemens, 2011. "Competition, cooperation, and corporate culture," RAND Journal of Economics, RAND Corporation, vol. 42(1), pages 23-43, March.
    3. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    4. Sabrina Teyssier, 2008. "Les Modes de Rémunération comme Mécanismes Sélectifs de la Main d’oeuvre : Fondements Théoriques et Estimations Empiriques," Working Papers 0818, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    5. Brice Corgnet & Roberto Hernán-González & Stephen Rassenti, 2011. "Real Effort, Real Leisure and Real-time Supervision: Incentives and Peer Pressure in Virtual Organizations," Working Papers 11-05, Chapman University, Economic Science Institute.
    6. Roland Bénabou & Jean Tirole, 2016. "Bonus Culture: Competitive Pay, Screening, and Multitasking," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 305-370.
    7. Kenju Kamei & Thomas Markussen, 2023. "Free Riding and Workplace Democracy—Heterogeneous Task Preferences and Sorting," Management Science, INFORMS, vol. 69(7), pages 3884-3904, July.
    8. De Paola, Maria & Gioia, Francesca & Scoppa, Vincenzo, 2019. "Free-riding and knowledge spillovers in teams: The role of social ties," European Economic Review, Elsevier, vol. 112(C), pages 74-90.
    9. Kato, Takao & Kauhanen, Antti & Kujansuu, Essi, 2013. "The Performance Effects of Individual and Group Incentives: A Case Study," ETLA Working Papers 19, The Research Institute of the Finnish Economy.
    10. Pierre Koning & J. Vyrastekova & S. Onderstal, 2006. "Team incentives in public organisations; an experimental study," CPB Discussion Paper 60, CPB Netherlands Bureau for Economic Policy Analysis.
    11. Guido Friebel & Matthias Heinz & Miriam Krueger & Nikolay Zubanov, 2017. "Team Incentives and Performance: Evidence from a Retail Chain," American Economic Review, American Economic Association, vol. 107(8), pages 2168-2203, August.
    12. Bauer, Kevin & Kosfeld, Michael & von Siemens, Ferdinand, 2021. "Incentives, Self-Selection, and Coordination of Motivated Agents for the Production of Social Goods," IZA Discussion Papers 14595, Institute of Labor Economics (IZA).
    13. Dur, Robert & Sol, Joeri, 2010. "Social interaction, co-worker altruism, and incentives," Games and Economic Behavior, Elsevier, vol. 69(2), pages 293-301, July.
    14. von Siemens, Ferdinand A. & Kosfeld, Michael, 2014. "Team production in competitive labor markets with adverse selection," European Economic Review, Elsevier, vol. 68(C), pages 181-198.
    15. Deversi, Marvin & Kocher, Martin G. & Schwieren, Christiane, 2020. "Cooperation in a Company: A Large-Scale Experiment," IHS Working Paper Series 15, Institute for Advanced Studies.
    16. Paweł Doligalski & Abdoulaye Ndiaye & Nicolas Werquin, 2023. "Redistribution with Performance Pay," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 1(2), pages 371-402.
    17. Bäker, Agnes & Mertins, Vanessa, 2013. "Risk-sorting and preference for team piece rates," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 285-300.
    18. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    19. Bradler, Christiane, 2015. "How creative are you? An experimental study on self-selection in a competitive incentive scheme for creative performance," ZEW Discussion Papers 15-021, ZEW - Leibniz Centre for European Economic Research.
    20. Uwe Jirjahn & Kornelius Kraft, 2010. "Teamwork And Intra‐Firm Wage Dispersion Among Blue‐Collar Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 404-429, September.

    More about this item

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:syd:wpaper:2123/9543. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vanessa Holcombe (email available below). General contact details of provider: https://edirc.repec.org/data/deusyau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.