Poor public transport can reduce employment in
the formal sector
Public transport infrastructure has not kept up
with the demands of growing populations in cities in developing countries.
Infrastructure provision has historically been biased against less affluent
areas, so access to formal jobs is often difficult and costly for a large
part of the lower-income population. As a result, low-income workers may be
discouraged from commuting to formal jobs, lack information on job
opportunities, and face discrimination. Through these channels, constrained
accessibility can result in higher rates of job informality. Reducing
informality can be a target for well-designed transport policies.
Firms’ concerns about the well-being of their
employees are largely supported by the evidence
Recently, large companies like Google have made
substantial investments in the well-being of their workers. While evidence
shows that better performing companies have happier employees, there has
been much less research on whether happy employees contribute to better
company performance. Finding causal relations between employee well-being
and company performance is important for firms to justify spending corporate
resources to provide a happier work environment for their employees. While
correlational and laboratory studies do find a positive relationship, the
evidence remains sparse.
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.
The impact of part-time workers on firms’
productivity is unclear, and lower wages depend mainly on occupation and
About one in five workers across OECD countries
is employed part-time, and the share has been steadily increasing since the
beginning of the economic and financial crisis in 2007. Part-time options
play an important economic role by providing more flexible working
arrangements for both workers and firms. Part-time employment has also
contributed substantially to increasing the employment rate, especially
among women. However, part-time work comes at a cost of lower wages for
workers, mainly because part-time jobs are concentrated in lower paying
occupations and sectors, while the impact on firms’ productivity is still
not very clear.
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.
Employers can use laboratory experiments to
structure payment policies and incentive schemes
Can a company attract a different type of
employee by changing its compensation scheme? Is it sufficient to pay more
to increase employees’ motivation? Should a firm provide evaluation feedback
to employees based on their absolute or their relative performance?
Laboratory experiments can help address these questions by identifying the
causal impact of variations in personnel policy on employees’ productivity
and mobility. Although they are collected in an artificial environment, the
qualitative external validity of findings from the lab is now well