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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 Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 383, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  • Handle: RePEc:trf:wpaper:383
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    References listed on IDEAS

    as
    1. Ernst Fehr & Georg Kirchsteiger & Arno Riedl, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 437-459.
    2. 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.
    3. 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.
    4. 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.
    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. 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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    3. Eric van Damme, 2013. "Preventing Abuse by Controlling Shareholders," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 169(1), pages 190-196, March.
    4. Lea Cassar, 2014. "Optimal contracting with endogenous project mission," ECON - Working Papers 150, Department of Economics - University of Zurich, revised Oct 2014.
    5. Burdin, Gabriel & Halliday, Simon & Landini, Fabio, 2015. "Third-Party vs. Second-Party Control: Disentangling the Role of Autonomy and Reciprocity," IZA Discussion Papers 9251, Institute of Labor Economics (IZA).
    6. Butz, Britta & Guillen Alvarez, Pablo & Harbring, Christine, 2021. "Incentives for Cooperation in Teams: Sociality Meets Decision Rights," IZA Discussion Papers 14242, Institute of Labor Economics (IZA).
    7. 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.
    8. 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, pages 119-152.
    9. Lea Cassar, 2014. "Job mission as a substitute for monetary incentives: experimental evidence," ECON - Working Papers 177, Department of Economics - University of Zurich.

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    More about this item

    Keywords

    high-performance work systems; wages; discretion; gift exchange; job satisfaction;
    All these keywords.

    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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