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Discussion Paper Details

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Title: Workplace Incentives and Organizational Learning

Author(s): Francesco Amodio and Miguel Martinez-Carrasco

Publication Date: November 2020

Keyword(s): Inputs, Organizational Learning and workplace incentives

Programme Area(s): Development Economics, Industrial Organization and Labour Economics

Abstract: This paper studies learning within organizations when incentives change. We use a simple principal-agent model to show how, in the presence of imperfect information over the shape of the production function, worker's effort choice changes over time as information is disclosed and processed. We also show that changes in workers compensation can trigger such learning process. We test this hypothesis using personnel records from a Peruvian egg production plant. Exploiting a sudden change in the compensation schedule, we find that workers learn from each other over the shape of the production function. This adjustment process is costly for the firm.

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Bibliographic Reference

Amodio, F and Martinez-Carrasco, M. 2020. 'Workplace Incentives and Organizational Learning'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15498