Knowledge that Transforms

The importance of fair and equal treatment of workers is at the heart of the debate in organizational management. In this regard, we study how reward schemes and production technologies affect effort provision in teams. Our experimental results demonstrate that unequal rewards can potentially increase productivity by facilitating coordination and that the effect strongly interacts with the exact shape of the production function. Taken together, our data highlight the relevance of the production function for organization construction and suggest that equal treatment of equals is neither a necessary nor a sufficient prerequisite for eliciting high performance in teams.

In the context of certain dynamic models, it is possible to infer the elasticity of labor supply to the firm from the elasticity of the quit rate with respect to the wage. Using this property, we estimate the average labor supply elasticity to public school districts in Missouri. We leverage the plausibly exogenous variation in prenegotiated district salary schedules to instrument for actual salary. These estimates imply a labor supply elasticity of about 3.7, suggesting that school districts possess significant market power. The presence of monopsony power in this teacher labor market may be partially explained by its institutional features.

Life cycle employment of minority labor migrants who entered Norway in the early 1970s diverges from that of natives. Immigrant employment was nearly complete during early years but declined to 50% by the year 2000 (compared to 87% for a native comparison group). We find that immigrant employment is particularly sensitive to the business cycle and that economic downturns of the 1980s and 1990s accelerated their labor market exit. We trace part of the decline to migrants being overrepresented in shrinking industries. But we also identify welfare disincentives that contribute to poor life cycle employment performance of immigrants with many dependent family members.

We examine the relationship between information technology (IT), productivity, and organization using a new panel data set of police departments that covers 1987–2003. When considered alone, increases in IT are not associated with reductions in crime rates, increases in clearance rates, or other productivity measures, and computing technology that increases reported crime actually generates the appearance of lower productivity. These results persist across various samples, specifications, and IT measures. IT investments are, however, linked to improved productivity when they are complemented with particular organizational and management practices, such as those associated with the Compstat program.