Discussion paper

DP9789 Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm

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.

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Citation

Svejnar, J (2014), ‘DP9789 Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm‘, CEPR Discussion Paper No. 9789. CEPR Press, Paris & London. https://cepr.org/publications/dp9789