Higher levels of air pollution reduce worker
productivity, even when air quality is generally low
Environmental regulations are typically
considered to be a drag on the economy. However, improved environmental
quality may actually enhance productivity by creating a healthier workforce.
Evidence suggests that improvements in air quality lead to improvements in
worker productivity across a range of sectors, including agriculture,
manufacturing, and the service sectors. These effects also arise at levels
of air quality that are below pollution thresholds in countries with the
highest levels of environmental regulation. The findings suggest a new
approach for understanding the consequences of environmental
How different procedures might succeed in
Alternative dispute resolution procedures such as
arbitration and mediation are the most common methods for resolving wage,
contract, and grievance disputes, but they lead to varying levels of success
and acceptability of the outcome depending on their design. Some innovative
procedures, not yet implemented in the real world, are predicted to improve
on existing procedures in some ways. But controlled tests of several
procedures show that the simple addition of a nonbinding stage prior to
binding dispute resolution can produce the best results in terms of cost
(monetary and “uncertainty” costs) and acceptability.
Blind recruitment can level the playing field
in access to jobs but cannot prevent all forms of discrimination
The use of anonymous job applications (or blind
recruitment) to combat hiring discrimination is gaining attention and
interest. Results from field experiments and pilot projects in European
countries (France, Germany, the Netherlands, and Sweden are considered
here), Canada, and Australia shed light on their potential to reduce some of
the discriminatory barriers to hiring for minority and other disadvantaged
groups. But although this approach can achieve its primary aims, there are
also important cautions to consider.
Donors rely on overhead costs to evaluate
charities, but that reliance creates disincentives for charities to hire
Charity rating agencies often focus on overhead
cost ratios in evaluating charities, and donors appear to be sensitive to
these measures when deciding where to donate. Yet, there appears to be a
tenuous connection between this widely-used metric and a charity’s
effectiveness. There is evidence that a focus on overhead costs leads
charities to underinvest in important functions, especially skilled workers.
To evaluate policies that regulate overhead costs, it is necessary to
examine whether donors care about overhead costs, whether they are good
measures of charity effectiveness, and what effects a focus on overhead
costs has on charities.
Workers care about employers’ social causes, but
the public sector does not attract particularly motivated employees
Employees are more willing to work and put
effort in for an employer that genuinely promotes the greater good. Some are
also willing to give up part of their compensation to contribute to a social
cause they share. Being able to attract a motivated workforce is
particularly important for the public sector, where performance is usually
more difficult to measure, but this goal remains elusive. Paying people more
or underlining the career opportunities (as opposed to the social aspects)
associated with public sector jobs is instrumental in attracting a more
productive workforce, while a proper selection process may mitigate the
negative impact on intrinsic motivation.
Individual bonuses do not always raise
performance; it depends on the characteristics of the job
Economists have for a long time argued that
performance-based bonuses raise performance. Indeed, many firms use bonuses
tied to individual performance to motivate their employees. However, there
has been heated debate among human resources professionals recently, and
some firms have moved away from individual performance bonuses toward fixed
wages only or collective performance incentive schemes such as
profit-sharing or team incentives. The appropriate approach depends on each
company's unique situation, and managers need to realize that individual
bonus plans are not a panacea to motivate employees.
What evidence exists on whether bad bosses
damage workers’ performance, or good bosses enhance it?
A good boss can have a substantial positive
effect on the productivity of a typical worker. While much has been written
about the peer effects of working with good peers, the effects of working
with good bosses appear much more substantial. A good boss can enhance the
performance of their employees and can lower the quit rate. This may also be
relevant in situations where it is challenging to employ incentive pay
structures, such as when quality is difficult to observe. As such, firms
should invest sufficiently in the hiring of good bosses with skills that are
appropriate to their role.
Firms need to tailor their allocation of talent
and responsibility, and their managerial structure, to fit their competitive
Managers are supervising more and more workers,
and firms are getting flatter. However, not all firms have been keen on
increasing the number of subordinates that their bosses manage (referred to
as the “span of control” in human resource management), contending that
there are limits to leveraging managerial ability. The diversity of firms’
organizational structure suggests that no universal rule can be applied.
Identifying the factors behind the choice of firms’ internal organization is
crucial and will help firms properly design their hierarchy and efficiently
allocate scarce managerial resources within the organization.