Workers‘ productivity and managers‘ unfairness towards co-workers – A field experiment

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 28.11.2017, 12:15 - 13:30


Presentation by 

Matthias Sutter (Max Planck Institute for Research on Collective Goods)


We present a field experiment in which we set up a call-center to study how workers’ productivity is affected if managers treat their co-workers in an unfair way. This question cannot be studied in long-lived organizations since workers may change their career expectations (and hence effort) when managers behave unfairly towards co-workers. In order to rule out such confounds and to measure productivity changes of unaffected workers in a clean way, we create an environment where employees work for two shifts. In one treatment, we lay off parts of the workforce before the second shift in an unfair way. Compared to two different control treatments, we find that in the layoff-treatment the productivity of the remaining, unaffected workers drops by 12 percent. We show that this result is not driven by peer effects or altered beliefs about the job or the managers’ competence, but rather related to workers’ perception of unfair behavior of employers towards co-workers. The latter interpretation is confirmed in a survey among professional HR-managers. We also show that our effect size of an employer’s unfair behavior towards co-workers on unaffected workers’ productivity is close to the upper bound of the direct effects of wage cuts on affected workers’ productivity. This suggests that the price of an employer’s unfair behavior goes well beyond the potential tit-for-tat of directly affected workers.

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