Research
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Discussion Papers and papers in the editorial process
Abstract: Performance pay has been shown to have important implications for worker and firm productivity. In this study, we apply a dynamic difference-in-differences estimator to estimate the causal effects of the introduction of a generous bonus pay program with salient performance thresholds on incentivized and non-incentivized performance outcomes in a call center. On average, the performance pay program did not affect workers’ perfor- mance. We show, however, that this result conceals an underlying heterogeneity in the response to performance pay: High-skilled workers are more likely to meet the performance targets, while low-skilled workers are less likely to do so and might even perform worse in the non-incentivized outcome. The findings can be rationalized with the idea that the costs of effort differ for individual workers. We also explore whether agents alter their overtime hours and find a negative effect, possibly avoiding lower call quality through longer working hours.
[download]
We assess selection bias in estimated returns to workplace training by exploiting a field experiment in which workers were randomly assigned to a one-week training program. Using the causal estimate of the effect of the training program on worker productivity as a benchmark, we compare it to non-experimental estimates that is estimated using a sample who were chosen not to participate in the field experiment. Because the latter group is (potentially) endogenously selected, we expect the non-experimental estimates to be biased due to unobservable characteristics. The results show that non-experimental estimates are biased, yielding estimated returns of up to twice as high as the causal returns. We show that when controlling for pre-treatment performance, individual fixed effects, as well as applying entropy matching, only a very small bias remains.
[most recent version: please e-mail me] [previously released as IZA DP 13789]
This paper examines the effects of a gender quota on supervisory boards implemented in Germany in 2016, which mandated 106 large firms to have at least 30% of women on their supervisory boards. Applying a difference-in-differences approach to panel data on firms, we find that the introduction of the quota increased the share of firms complying with the quota law. We also find, however, that this positive effect originated from earlier attempts to introduce quotas for supervisory boards. We neither find that other characteristics of supervisory board members are affected, nor that the quota created spillover effects on the untargeted executive boards. For firm performance, we find, if any, positive effects of the quota introduction.
[most recent version: please e-mail me]
We study both endogenous and exogenous peer effects in worker productivity using an explicit network approach. We apply this method to data from an in-house call center of a multinational mobile network operator that include detailed information on individual performance. We find that an increase in average co-worker current productivity increases worker productivity, while an increase in average co-worker permanent productivity decreases worker productivity. We also investigate when peer effects matter and show that the relative importance of these two types of peer effects depends on the volume of incoming calls.
[most recent version: please e-mail me]]
[non-technical summary: Voxeu.org]
[previously circulated as IZA DP No. 15131 and as “Network Effects on Worker Productivity” (CEPR DP 10928)]
Selected work in progress
“Heterogeneous impacts of COVID-19 on incomes” (with Adrian Adermon, Lisa Laun, Costanza Naguib, Martin Olsson, and Anna Sjögren)
“Hiring discrimination along the life-cycle.” (with Sebastian Butschek and Louis-Pierre Lepage)
“The effects of a large compensatory government grant in a decentralized school system” (with Olof Rosenqvist)
“Dynamic Effects of Bonus Pay: Evidence from Personnel Data” (with Anders Frederiksen)
Publications
Many governments introduced temporary adjustments to counter the economic and health consequences of the COVID-19 pandemic. We study the importance of already-existing government transfers and new pandemic measures to mitigate individual income losses during the onset of the pandemic in Sweden using a difference-in-differences approach and population-wide data on monthly earnings and government transfer payments. We find that labor earnings dropped by 2.7 percent in 2020. Existing transfers and new pandemic measures reduced earnings losses to 1.5 percent. These average effects mask considerable differences in earnings losses, which were, by and large, evened out by existing transfers and new pandemic measures.
[publisher version (open access)] [bibtex]
[previously released as IZA DP15662, IFAU WP 2022:20 and IFN WP 1443]
To estimate the causal effect of employment protection on firms’ worker selection, we study a policy change that reduced dismissal costs for the employers of over a tenth of Sweden’s workforce. Our difference-in-differences analysis of firms’ hiring uses individual ability measures including estimated worker fixed effects, GPA at age 15, and military test scores. We find that the reform reduced minimum hire quality by around 2%. Our results show that firms both decreased their hiring thresholds and hired more workers. We find that firms increasingly hired young, foreign born and long-term non-employed individuals, suggesting potential welfare gains from the reform.
[publisher version (gated)] [preprint] [previously released as IZA DP 12305] [bibtex]
We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd et al. (1999) to allow for idiosyncratically time-varying firm pay policies. We estimate the model using linked employer–employee data for Sweden from 1985 to 2016. By drawing on detailed firm financials data, we show that firms that become more productive and accumulate capital raise pay, whereas firms lower pay as they add workers. A secular increase in firm-year pay dispersion in Sweden since 1985 is accounted for by greater persistence of firm pay among incumbent firms as well as greater dispersion in firm pay among entrant firms, as opposed to more volatile firm pay.
[publisher version (open access)] [bibtex]
[previously released as CEPR DP 16922, IZA DP 15014, NBER WP 29697]
Do reciprocal workers have higher returns to employer-sponsored training? Using a field experiment with random assignment to training combined with survey information on workers’ reciprocal inclinations, the results show that reciprocal workers reciprocate employers’ training investments by higher posttraining performance. This result, which is robust to controlling for observed personality traits and worker fixed effects, suggests that individuals reciprocate the firm’s human capital investment with higher effort, in line with theoretical models on gift exchange in the workplace. This finding provides an alternative rationale to explain firm training investments even with the risk of poaching.
[publisher version (open access)] [bibtex]
Measuring workers’ productivity is important for public policy and private-sector decision-making. Due to the lack of a general measure that captures workers’ productivity, firms often use one- or multi-dimensional performance measures, which can be used, for example, to analyze how different incentive systems affect workers’ behavior. The public sector itself also uses measures to monitor and evaluate personnel, such as teachers. Policymakers and managers need to understand the advantages and disadvantages of the available metrics to select the right performance measures for their purpose.
[publisher version (open access)] [Spanish version] [German version] [bibtex]
This paper provides new evidence on gender bias in teaching evaluations. We exploit a quasi-experimental dataset of 19,952 student evaluations of university faculty in a context where students are randomly allocated to female or male instructors. Despite the fact that neither students’ grades nor self-study hours are affected by the instructor’s gender, we find that women receive systematically lower teaching evaluations than their male colleagues. This bias is driven by male students’ evaluations, is larger for mathematical courses, and particularly pronounced for junior women. The gender bias in teaching evaluations we document may have direct as well as indirect effects on the career progression of women by affecting junior women’s confidence and through the reallocation of instructor resources away from research and toward teaching.
[publisher version (open access)] [bibtex] [non-technical summaries & press: IZA Newsroom, The Economist, SZ, BR, Universitetsläraren, OUP Blog, Ökonomenstimme]
This paper studies the link between working hours and productivity using daily information on working hours and performance of a sample of call centre agents. We exploit variation in the number of hours worked by the same employee across days and weeks due to central scheduling, enabling us to estimate the effect of working hours on productivity. We find that as the number of hours worked increases, the average handling time for a call increases, meaning that agents become less productive. This result suggests that fatigue can play an important role, even in jobs with mostly part-time workers.
[publisher version (gated)] [preprint] [bibtex] [non-technical summary & press: IZA Newsroom, Moment]
The Dunning–Kruger effect states that low performers vastly overestimate their performance while high performers more accurately assess their performance. Researchers usually interpret this empirical pattern as evidence that the low skilled are vastly overconfident while the high skilled are more accurate in assessing their skill. However, measurement error alone can lead to a negative relationship between performance and overestimation, even if skill and overconfidence are unrelated. To clarify the role of measurement error, we restate the Dunning–Kruger effect in terms of skill and overconfidence. We show that we can correct for bias caused by measurement error with an instrumental variable approach that uses a second performance as instrument. We then estimate the Dunning–Kruger effect in the context of the exam grade predictions of economics students, using their grade point average as an instrument for their exam grade. Our results show that the unskilled are more overconfident than the skilled. However, as we predict in our methodological discussion, this relationship is significantly weaker than ordinary least squares estimates suggest.
[publisher version (gated)] [preprint] [bibtex]
This paper surveys the empirical literature on the behavior of referees in professional football and other sports. Referees are typically appointed by a principal to be impartial, especially when unbiased referee judgment is vital for the accomplishment of the principal’s objective. Answering whether referees make biased decisions and understanding the causes that lead referees to digress from their principal duty of impartiality is therefore fundamental from a theoretical point of view. At the same time, assessing the prevalence and origin of referee bias is germane to various domains of life. Referee bias is particularly relevant in sports, where partial decision-making can determine competition outcomes, which can have strong repercussions on athletes’ careers and supporters’ well-being.
[publisher version (gated)] [ungated version] [bibtex]
This paper investigates how newly hired workers learn on the job and the extent to which this learning is affected by their co-workers’ tenure. We estimate tenure-performance profiles using weekly panel data on individual workers’ performance. The results show a performance increase of 64% in the first year of the employment. We show that, during the first three months, workers placed in teams with more experienced peers have significantly steeper tenure-performance profiles than those employed in teams with less experienced peers. Our results suggest that placing new workers in more experienced teams reduces the time new hires need to become equally productive as an experienced worker by 36%, compared to being placed in less experienced teams.
[publisher version (gated)] [preprint] [bibtex]
Although the transfer of on-the-job training to the workplace belongs to the realm of educational research, it is also highly related to labour economics. In the economic literature, the transfer of training is based on the theoretical framework of human capital theory and has been extensively analysed empirically in econometric studies that take account of unobserved heterogeneity of workers and the selectivity in training participation. The aim of this paper is to give an overview of the underlying theoretical paradigm in economics, and the challenges faced in empirical research. The economic literature finds that participation in training is beneficial for both the participating workers and their employers, although there is also evidence that selectivity of workers matters. Despite this progress in the economic literature, the underlying processes through which training leads to a higher productivity remain unclear. We argue that this ‘black box’ offers opportunities for multi-disciplinary research projects on the transfer of training that relate the perspectives of educational and economic research.
[publisher version (gated)] [bibtex]
This paper analyses the effects of work-related training on worker productivity. To identify the causal effects from training, we combine a field experiment that randomly assigns workers to treatment and control groups with panel data on individual worker performance before and after training. We find that participation in the training programme leads to a 10 percent increase in performance. Moreover, we provide experimental evidence for externalities from treated workers on their untreated teammates: An increase of 10 percentage points in the share of treated peers leads to a performance increase of 0.51 percent. We provide evidence that the estimated effects are causal and not the result of employee selection into and out of training. Furthermore, we find that the performance increase is not due to lower quality provided by the worker.
[publisher version (gated)] [preprint] [bibtex] [Awarded the NRW Young Scientist Award 2012]
Conferences are an important element in the work of researchers, requiring substantial investments in fees, travel expenses and the time spent by the participants. The aim of this paper is to identify the preferences of participants with respect to conference characteristics. Based on a sample of European labour economists, preferences are measured using the vignette approach where participants are asked to choose between hypothetical European Association of Labour Economists (EALE) conferences. We find that the keynote speakers are the most important element in the preference for a conference, followed by the location of the conference. There is substantial heterogeneity in the taste of labour economists especially with respect to location, though the link between preference parameters and measured characteristics like gender, age and seniority is limited. Factor analysis suggests that the variety in preferences can be best described by a latent variable that reflects the weights people put on content versus fun.
[publisher version (gated)] [preprint] [bibtex]
Using a data set of science and engineering graduates from 12 European countries, we analyse the determinants of labour migration after graduation. We find that not only wage gains are driving the migration decision, but also differences in labour market opportunities, past migration experience and international student exchange are strong predictors of future migration. Contrary to our expectations, job characteristics such as the utilisation of skills in the job and involvement in innovation hardly affect the migration decision. When analysing country choice, countries such as the USA, Canada and Australia appear to attract migrants due to their larger R&D intensity. Moreover, graduates with higher grades are more likely to migrate to these countries.
[publisher version (gated)] [preprint] [bibtex]
Similar to other European countries, the use of fixed-term contracts in Germany has been deregulated since the 1980s. Though temporary employment can be seen as a possibility to re-enter the labour market, it is argued that temporary employment may lead to ‘dead-ends’ and to lower investments in further training. From a theoretical perspective, there are arguments for higher and for lower investments in further training for employers and employees. Thus, it is not clear whether firms and employees invest differently when temporary contracts are used. Using the German Mikrozensus 2004, this paper analyses the effect of temporary contracts an work-related training for low-skilled workers. To take systematic differences between temporary and permanent employees into account, we estimate a bivariate probit model for whether fixed-term employment affects participation in work-related training. We conclude that holding a temporary contract does not have systematic disadvantages in access to further training. The use of temporary contracts does not therefore worsen the situation of low-skilled employees in terms of their human capital accumulation.
[publisher version (open access)] [bibtex]
Retired working papers
In this paper, we estimate the relative earnings returns for Swedish upper secondary schooling programs with vocational and general contents for individuals born 1955-75. Using data on individuals’ application choices, we address endogeneity of program choice by exploiting admission cutoffs. These cutoffs, which are based on pupils’ grade point averages (GPA), allow us to estimate the returns to educational contents in a regression discontinuity (RD) framework. In addition, we control for students’ choice order to proxy for students’ comparative advantages. We apply this RD design to estimate the effects of schooling contents on annual earnings from 1978-2014. For men, we find that vocational schooling has an earnings advantage over general schooling up and until the age of 27, with estimates thereafter close to zero. For women, we observe a similar earnings advantage for vocational schooling up and until the age of 23. For the longer term, there are no coherent earnings differences for men. For women with vocational schooling, there is a renewed earnings advantage from age 43 and onwards. We find suggestive evidence that this can be explained by further education completed in adulthood.
[most recent version: download]
The effects of fixed-term contracts on participation and financing of work-related training are analysed with data from the German Socio-Economic Panel (GSOEP). In contrast to previous literature, we especially distinguish between employer- and employee-sponsored training to allow for diverging investment patterns of worker and firm. In order to control for the selection bias arising from different characteristics of individuals with fixed-term and permanent contracts, a bivariate probit model is applied. The main findings are (i), that temporary workers are faced by lower investments, and (ii), that there are no differences with respect to employer- and employee-sponsored training.
[most recent version: download]