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Measuring indirect effects of unfair employer behavior on worker productivity: A field experiment

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  • Heinz, Matthias
  • Jeworrek, Sabrina
  • Mertins, Vanessa
  • Schumacher, Heiner
  • Sutter, Matthias

Abstract

We present a field experiment in which we set up a call-center to study how the productivity of workers is affected if managers treat their co-workers in an unfair way. This question cannot be studied in long-lived organizations since workers may change their career expectations (and hence effort) when managers behave unfairly towards co-workers. In order to rule out such confounds and to measure productivity changes of unaffected workers in a clean way, we create an environment where employees work for two shifts. In one treatment, we lay off parts of the workforce before the second shift. Compared to two different control treatments, we find that, in the layoff treatment, the productivity of the remaining, unaffected workers drops by 12 percent. We show that this result is not driven by peer effects or altered beliefs about the job or the managers' competence, but rather related to the workers' perception of unfair behavior of employers towards co-workers. The latter interpretation is confirmed in a survey among professional HR managers. We also show that the effect of unfair behavior on the productivity of unaffected workers is close to the upper bound of the direct effects of wage cuts on the productivity of affected workers. This suggests that the price of an employer's unfair behavior goes well beyond the potential tit-for-tat of directly affected workers.

Suggested Citation

  • Heinz, Matthias & Jeworrek, Sabrina & Mertins, Vanessa & Schumacher, Heiner & Sutter, Matthias, 2017. "Measuring indirect effects of unfair employer behavior on worker productivity: A field experiment," IWH Discussion Papers 26/2017, Halle Institute for Economic Research (IWH).
  • Handle: RePEc:zbw:iwhdps:262017
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    Cited by:

    1. Becker, Johannes & Hopp, Daniel & Süß, Karolin, 2020. "How altruistic is indirect reciprocity? - Evidence from gift-exchange games in the lab," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224592, Verein für Socialpolitik / German Economic Association.
    2. Sabrina Jeworrek & Joschka Waibel, 2021. "Unethical employee behavior against coworkers following unkind management treatment: An experimental analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1220-1234, July.
    3. Sule Alan & Gozde Corekcioglu & Matthias Sutter, 2021. "Improving Workplace Climate in Large Corporations: A Clustered Randomized Intervention," CESifo Working Paper Series 9304, CESifo.
    4. Nisvan Erkal & Steven Y. Wu & Brian E. Roe, 2022. "Putting relational contract theory to the test: experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 111-139, February.
    5. Adrian Chadi & Mario Mechtel & Vanessa Mertins, 2022. "Smartphone bans and workplace performance," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 287-317, February.
    6. Rudolf Kerschbamer & Regine Oexl, 2021. "The effect of random shocks on reciprocal behavior in dynamic principal-agent settings," Working Papers 2021-27, Faculty of Economics and Statistics, University of Innsbruck.
    7. Peter Bußwolder & Swetlana Dregert & Peter Letmathe, 2019. "Consequences of Unfair Job Promotions in Organizations," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 71(1), pages 3-26, February.
    8. Chadimová, Kateřina & Cahlíková, Jana & Cingl, Lubomír, 2022. "Foretelling what makes people pay: Predicting the results of field experiments on TV fee enforcement," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 100(C).
    9. Haile, Getinet Astatike, 2022. "Organisational Leadership: How Much Does It Matter?," IZA Discussion Papers 15554, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    gift exchange; layoffs; labor markets; fairness; field experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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