Incentive pay and performance: Insider econometrics in a multi-unit firm

0493113 - NHÚ 2019 RIV NL eng J - Journal Article
Bogaard, H. - Švejnar, Jan
Incentive pay and performance: Insider econometrics in a multi-unit firm.
Labour Economics. Roč. 54, October (2018), s. 100-115. ISSN 0927-5371. E-ISSN 1879-1034
R&D Projects: GA ČR(CZ) GBP402/12/G130
Institutional support: RVO:67985998
Keywords : insider econometrics * endogeneity of HRM policies * incentives
OECD category: Applied Economics, Econometrics
Impact factor: 1.327, year: 2018

Exploiting organizational reforms in a foreign-owned bank in Central-East Europe, we carry out an insider econometrics study of the implementation of modern human resource management reforms giving some employees high-powered incentives. We use branch-level panel data and particular features of the reform process to implement two estimators that address endogeneity bias (an outstanding issue in this literature) in a complementary fashion: an IV approach and Generalized Propensity Score estimation. In line with theory we show that some reforms had a positive impact on productivity. We also underscore the risks of introducing quantity-based incentives where quality is important.
Permanent Link: http://hdl.handle.net/11104/0286547