Input Allocation, Workforce Management and Productivity Spillovers: Evidence from Personnel Data

Abstract

This paper shows how human resource management practices and input heterogeneity jointly trigger productivity spillovers at the workplace. In an egg production plant in rural Peru, workers produce output combining effort with inputs of heterogeneous quality. Exploiting quasi-random variation in the productivity of inputs assigned to workers, we find evidence of a negative causal effect of an increase in coworkers' daily output on own output and its quality. We show both theoretically and empirically that the effect captures free riding among workers, which originates from the way the management informs its decisions on whether and who to dismiss. Evidence also suggests that the provision of monetary and social incentives can offset negative productivity spillovers. Our study and results show that production and human resource management practices interact in the generation of externalities at the workplace. Counterfactual analyses suggest productivity gains from the implementation of alternative input assignment schedules and dismissal policies to be up to 20%.

Socializing at Work: Evidence from a Field Experiment with Manufacturing Workers

“…That is, social relationships in the workplace may not always be detrimental to job performance nor to a firm's profit. Studies find that the presence of social relationships can enhance performance when friends can provide incentives to speed up (Bandiera, Barankay, and Rasul 2010) or if friends can serve as a source of social pressure in work environments with incentives to free ride on one's peer (Bandiera, Barankay, and Rasul 2013;Amodio and Martinez-Carrasco 2018).…”

“…4 The authors further explain that the behavior is driven by incentives to socialize with their partners and not because of social preferences such as inequality aversion. In a recent study, Amodio and Martinez-Carrasco (2018) investigates productivity spillovers in an egg production plant, at which worker compensation is largely based on a fixed wage, and find that working next to a friend mitigates free-riding behavior. 5 Cornelissen, Dustmann, and SchÖnberg (2017) shows that peer effects, in general, differ across occupation types.…”

Management and Shocks to Worker Productivity

“…Assigning workers to tasks optimally based on their relative advantages is a key lever through which good management drives productivity, and is critical to the overall success of firms. While much theory has been brought to bear on this topic (Costa, 1988;Holmstrom and Tirole, 1989;Lazear and Oyer, 2007), the empirical literature on evaluating the importance of task assignment within firms is relatively recent (Amodio and Martinez-Carrasco, 2018;Bandiera et al, 2007Bandiera et al, , 2009Burgess et al, 2010;Friebel et al, 2017;Hjort, 2014). To the best of our knowledge, this study is the first to examine how idiosyncratic productivity shocks affect this task allocation process.…”

Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters

“…Access to wealthier, quality sensitive markets brings rising returns to output quality, 2 but producing high quality output typically requires high quality inputs (see e.g. Kugler & Verhoogen, 2012;Halpern et al , 2015;Amodio & Martinez-Carrasco, 2018). Because input quality is often hard for firms to measure and contract over (Gibbons, 2005a;Lafontaine & Slade, 2007)-especially where institutions are weak (Woodruff, 2002;Nunn, 2007)-organizational structure may play a crucial role in firms' ability to meet demand for quality.…”

“…18 The literature on quality upgrading is larger. It is now well-documented that producers of high quality goods use high quality inputs (Kugler & Verhoogen, 2012;Halpern et al , 2015;Amodio & Martinez-Carrasco, 2018;Bastos et al , 2018), skilled workers (Verhoogen, 2008;Frías et al , 2009;Brambilla et al , 2012;Brambilla & Porto, 2016;Brambilla et al , forthcoming), and export to richer destinations (Hallak, 2006;Verhoogen, 2008;Manova & Zhang, 2012;Atkin et al , 2017;Bastos et al , 2018). Firms with such a profile tend on average to be bigger, more productive, based in richer countries themselves, and to face foreign competition in low-quality segments (Schott, 2004;Hummels & Klenow, 2005;Baldwin & Harrigan, 2011;Johnson, 2012;Medina, 2017).…”