DP9789 Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm
|Author(s):||Hein Bogaard, Jan Svejnar|
|Publication Date:||January 2014|
|Keyword(s):||Banking, Central and Eastern Europe, Endogeneity of HRM Policies, Foreign Ownership, Incentives, Insider Econometrics|
|JEL(s):||F23, G21, M52|
|Programme Areas:||Labour Economics, Public Economics, Industrial Organization|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9789|
We exploit organizational reforms in a foreign-owned bank in Central-East Europe to study the implementation of modern HRM policies in an emerging market context. We have branch-level data and use our knowledge of the process that led to the adoption of the reforms to implement two estimators that address endogeneity bias in a complementary fashion: an IV approach and Generalized Propensity Score estimation. Our results show that some of the reforms had a positive impact on productivity, but they also underscore the risks of quantity-based incentives where quality is important.