|Bartling, Björn and Fehr, Ernst and Schmidt, Klaus M. (2010): Screening, Competition, and Job Design. Economic Origins of Good Jobs. Discussion Papers in Economics 2010-7|
In recent decades, many firms offered more discretion to their employees, often increasing the productivity of effort but also leaving more opportunities for shirking. These “high-performance work systems” are difficult to understand in terms of standard moral hazard models. We show experimentally that complementarities between high effort discretion, rent-sharing, screening opportunities, and competition are important driving forces behind these new forms of work organization. We document in particular the endogenous emergence of two fundamentally distinct types of employment strategies. Employers either implement a control strategy, which consists of low effort discretion and little or no rent-sharing, or they implement a trust strategy, which stipulates high effort discretion and substantial rent-sharing. If employers cannot screen employees, the control strategy prevails, while the possibility of screening renders the trust strategy profitable. The introduction of competition substantially fosters the trust strategy, reduces market segmentation, and leads to large welfare gains for both employers and employees.
|Item Type:||Paper (Discussion Paper)|
|Keywords:||job design, high-performance work systems, screening, reputation, competition, trust, control, social preferences, complementarities|
Economics > Discussion Papers in Economics
Economics > Discussion Papers in Economics > Labor
|Subjects:||300 Social sciences > 300 Social sciences, sociology and anthropology|
300 Social sciences > 330 Economics
|JEL Classification:||C91, D86|
|Deposited On:||18. Jan 2010 21:11|
|Last Modified:||24. May 2012 16:39|
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