Wage cuts and managers' empathy: How a positive emotion can contribute to positive organizational ethics in difficult times

Using the lens of positive organizational ethics, we theorized that empathy affects decisions in ethical dilemmas that concern the well-being of not only the organization but also other stakeholders. We hypothesized and found that empathetic managers were less likely to comply with requests by an authority figure to cut the wages of their employees than were non-empathetic managers. However, when an authority figure requested to hold wages constant, empathy did not affect wage cut decisions. These findings imply that empathy can serve as a safeguard for ethical decision making in organizations during trying times without generally undermining organizational effectiveness. We conclude by discussing the implications of our research.

Décision de baisser les salaires ou non: Le rôle de l'empathie face à une recommandation d'un supérieur hiérarchique (The role of Empathy in wage cut decisions).

En entreprise, les supérieurs hiérarchiques ont une influence non négligeable sur la prise de décision de leurs subordonnés. Ces derniers tendent à se conformer à l'avis de leur supérieur pour prendre leurs décisions. Toutefois, cette conformité des subordonnés à l'avis de leur supérieur peut devenir un problème lorsque l'avis reçu est questionnable d'un point de vue éthique. Les études antérieures menées à ce sujet ont démontré que le contenu n'a pas d'impact, c'est-à-dire que du moment qu'un avis est donné par un supérieur hiérarchique, les subordonnés tendent à se conformer à cet avis quelque soit son contenu. Dans la présente expérience, nous nous sommes intéressés à ce phénomène de conformité dans une prise de décision ayant des conséquences sur des personnes. En particulier, nous avons étudié le rôle de l'empathie, définit comme l'habilité de ressentir les émotions des autres ou de se mettre à leur place. Notre première hypothèse concerne l'effet principal de l'avis du supérieur : les participants tiennent compte de l'avis de leur supérieur dans leur prise de décision. Notre seconde hypothèse concerne le rôle modérateur de l'empathie: les participants haut en empathie sont moins sensibles à l'avis de leur supérieur que les participants bas en empathie étant donné qu'ils anticipent les conséquences de leur décision vis-à-vis des personnes concernées. Cent-douze étudiants ont participé à un exercice de mise en situation. Dans la peau d'un chef de Département d'une entreprise, ils devaient entre autres réfléchir au problème du niveau des salaires du personnel peu qualifié et en particulier au fait que cette catégorie de salariés était surpayée par rapport à ce qui se pratiquait sur le marché du travail. Cette expérience était composée de deux conditions, où l'avis du supérieur était manipulé. Dans la condition 1, l'avis du supérieur était de baisser les salaires, alors que dans la condition 2 l'avis était de garder les salaires constants. Les résultats ont confirmé nos hypothèses. Les participants recevant l'avis de leur supérieur de baisser les salaires ont effectivement pris la décision de baisser les salaires. Il a aussi été démontré que le niveau d'empathie modère cette relation. Les participants haut en empathie ont eu tendance à ne pas suivre l'avis donné contrairement aux participants bas en empathie. Cela démontre ainsi l'influence que peut avoir le contexte sur les individus et leur prise de décision mais aussi que les caractéristiques personnelles ont une influence non négligeable.

Labor Market Signaling and Self-Confidence: Wage Compression and the Gender Pay Gap

I extend Spence's signaling model by assuming that some workers are overconfident-they underestimate their marginal cost of acquiring education-and some are underconfident. Firms cannot observe workers' productive abilities and beliefs but know the fractions of high-ability, overconfident, and underconfident workers. I find that biased beliefs lower the wage spread and compress the wages of unbiased workers. I show that gender differences in self-confidence can contribute to the gender pay gap. If education raises productivity, men are overconfident, and women underconfident, then women will, on average, earn less than men. Finally, I show that biased beliefs can improve welfare.

The eusociality continuum

Eusocial societies are traditionally characterized by a reproductive division of labor, an overlap of generations, and cooperative care of the breeders' young. Eusociality was once thought to occur only in termites, ants, and some bee and wasp species, but striking evolutionary convergences have recently become apparent between the societies of these insects and those of cooperatively breeding birds and mammals. These parallels have blurred distinctions between cooperative breeding and eusociality, leading to calls for either drastically restricting or expanding wage of these terms. We favor the latter approach. Cooperative breeding and eusociality are not discrete phenomena, but rather form a continuum of fundamentally similar social systems whose main differences lie in the distribution of lifetime reproductive success among group members. Therefore we propose to array vertebrate and invertebrate cooperative breeders along a common axis, representing a standardized measure of reproductive variance, and to drop such (loaded) terms as ''primitive'' and ''advanced'' eusociality. The terminology we propose unites all occurrences of alloparental helping of kin under a single theoretical umbrella (e.g., Hamilton's rule). Thus, cooperatively breeding vertebrates can be regarded as eusocial, just as eusocial inverbrates are cooperative breeders. We believe this integrated approach will foster potentially revealing cross-taxon comparisons, which are essential to understanding social evolution in birds, mammals, and in sects.

How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria

We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine differential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the "border regions" are defined narrowly, within a band of less than 50 kilometers, we can identify statistically significant liberalization effects on both employment and wages. While wages responded earlier than employment, the employment effect over the entire adjustment period is estimated to be around three times as large as the wage effect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.

Evidence-based Economic Policy - Three Essays in Applied Microeconometrics

Over thirty years ago, Leamer (1983) - among many others - expressed doubts about the quality and usefulness of empirical analyses for the economic profession by stating that "hardly anyone takes data analyses seriously. Or perhaps more accurately, hardly anyone takes anyone else's data analyses seriously" (p.37). Improvements in data quality, more robust estimation methods and the evolution of better research designs seem to make that assertion no longer justifiable (see Angrist and Pischke (2010) for a recent response to Leamer's essay). The economic profes- sion and policy makers alike often rely on empirical evidence as a means to investigate policy relevant questions. The approach of using scientifically rigorous and systematic evidence to identify policies and programs that are capable of improving policy-relevant outcomes is known under the increasingly popular notion of evidence-based policy. Evidence-based economic policy often relies on randomized or quasi-natural experiments in order to identify causal effects of policies. These can require relatively strong assumptions or raise concerns of external validity. In the context of this thesis, potential concerns are for example endogeneity of policy reforms with respect to the business cycle in the first chapter, the trade-off between precision and bias in the regression-discontinuity setting in chapter 2 or non-representativeness of the sample due to self-selection in chapter 3. While the identification strategies are very useful to gain insights into the causal effects of specific policy questions, transforming the evidence into concrete policy conclusions can be challenging. Policy develop- ment should therefore rely on the systematic evidence of a whole body of research on a specific policy question rather than on a single analysis. In this sense, this thesis cannot and should not be viewed as a comprehensive analysis of specific policy issues but rather as a first step towards a better understanding of certain aspects of a policy question. The thesis applies new and innovative identification strategies to policy-relevant and topical questions in the fields of labor economics and behavioral environmental economics. Each chapter relies on a different identification strategy. In the first chapter, we employ a difference- in-differences approach to exploit the quasi-experimental change in the entitlement of the max- imum unemployment benefit duration to identify the medium-run effects of reduced benefit durations on post-unemployment outcomes. Shortening benefit duration carries a double- dividend: It generates fiscal benefits without deteriorating the quality of job-matches. On the contrary, shortened benefit durations improve medium-run earnings and employment possibly through containing the negative effects of skill depreciation or stigmatization. While the first chapter provides only indirect evidence on the underlying behavioral channels, in the second chapter I develop a novel approach that allows to learn about the relative impor- tance of the two key margins of job search - reservation wage choice and search effort. In the framework of a standard non-stationary job search model, I show how the exit rate from un- employment can be decomposed in a way that is informative on reservation wage movements over the unemployment spell. The empirical analysis relies on a sharp discontinuity in unem- ployment benefit entitlement, which can be exploited in a regression-discontinuity approach to identify the effects of extended benefit durations on unemployment and survivor functions. I find evidence that calls for an important role of reservation wage choices for job search be- havior. This can have direct implications for the optimal design of unemployment insurance policies. The third chapter - while thematically detached from the other chapters - addresses one of the major policy challenges of the 21st century: climate change and resource consumption. Many governments have recently put energy efficiency on top of their agendas. While pricing instru- ments aimed at regulating the energy demand have often been found to be short-lived and difficult to enforce politically, the focus of energy conservation programs has shifted towards behavioral approaches - such as provision of information or social norm feedback. The third chapter describes a randomized controlled field experiment in which we discuss the effective- ness of different types of feedback on residential electricity consumption. We find that detailed and real-time feedback caused persistent electricity reductions on the order of 3 to 5 % of daily electricity consumption. Also social norm information can generate substantial electricity sav- ings when designed appropriately. The findings suggest that behavioral approaches constitute effective and relatively cheap way of improving residential energy-efficiency.

Do Financial Incentives Affect Firms' Demand For Disabled Workers?

A number of OECD countries aim to encourage work integration of disabled persons using quota policies. For instance, Austrian firms must provide at least one job to a disabled worker per 25 nondisabled workers and are subject to a tax if they do not. This "threshold design" provides causal estimates of the noncompliance tax on disabled employment if firms do not manipulate nondisabled employment; a lower and upper bound on the causal effect can be constructed if they do. Results indicate that firms with 25 nondisabled workers employ about 0.04 (or 12%) more disabled workers than without the tax; firms do manipulate employment of nondisabled workers but the lower bound on the employment effect of the quota remains positive; employment effects are stronger in low-wage firms than in high-wage firms; and firms subject to the quota of two disabled workers or more hire 0.08 more disabled workers per additional quota job. Moreover, increasing the noncompliance tax increases excess disabled employment, whereas paying a bonus to overcomplying firms slightly dampens the employment effects of the tax.

The political economy of childcare in OECD countries : Explaining cross-national variation in spending and coverage rates

If childcare policy has become topical in most OECD countries over the last ten years or so, actual developments display huge cross-national variations. Countries like Sweden and Denmark spend around 2 per cent of GDP on this service, and provide affordable childcare places to most children below school age. At the other extreme, in Southern Europe, only around 10 per cent of this age group has access to formal daycare. Against this background, this article aims to account for cross-national variations in childcare services. It distinguishes two dependent variables: the coverage rate and the proportion of GDP spent subsidising childcare services. Using a mix of cross-sectional and pooled times-series methods, it tests a series of hypotheses concerning the determinants of the development of this policy. Its main conclusion for the coverage rate is that key factors are public spending and wage dispersion (both positive). For spending, key factors are the proportion of women in parliaments (positive) and spending on age-related policies (negative).

Precarious Work: Agenda and Implications for Corporate Social Responsibility

Precarious work, in contrast to regular, permanent wage work, is commonly associated to insecure and unstable, and often poor quality jobs. The concept of precarious work relates either to a socioeconomic group which allows one to refer it to a "class in itself," or as - pursued more recently - to the precarization process which results in a growing fragmentation of societal structures. Common to both conceptions is that they refer to the exposition of workers to employment instability, limited access to legal and union protection, socially irresponsible and discriminating employment practices, and social and economic vulnerability in general. The present contribution provides an overview of some key issues and future directions of research on precarious work relevant to CSR researchers, policy-makers, and social scientists.

Le travail des sans-emploi : analyse sociologique de l'assignation à un programme d'emploi temporaire

RESUMECette recherche empirique porte sur les emplois temporaires subventionnés (ETS) instaurés dans le cadre du chômage et de l'aide sociale en Suisse depuis une dizaine d'années. La mise en place de politiques d'activation dans le cadre de la protection sociale met l'accent sur les liens explicites, souvent réglementaires, qu'entretiennent actuellement la protection sociale, les politiques de l'emploi et le marché du travail dans les pays industrialisés. Ces transformations ont largement contribué au développement d'activités exercées en marge du marché de l'emploi. Dans le cadre du chômage, comme dans celui de l'aide sociale, une mise au travail peut être exigée en contrepartie du versement des indemnités ; en Suisse, on nomme ce procédé l'assignation au travail. L'assignation est le processus par lequel un-e conseiller?ère en placement peut contraindre, sous peine de sanction (suppression des indemnités pour un temps déterminé) une personne au chômage (inscrit-e auprès d'un office régional de placement) à souscrire à une mesure du marché du travail (MMT), particulièrement les ETS.Cette recherche propose une analyse de l'assignation à un programme d'emploi temporaire sous l'éclairage de la sociologie du travail. Elle adopte une perspective compréhensive attentive aux tensions que vivent les individus pris dans une situation de travail hybride et inédite qui les place aux frontières des différentes catégories administratives de chômage, d'inactivité et de population occupée. Partant d'une étude empirique auprès de personnes assignées, cette recherche mène une analyse qualitative des conditions et de l'organisation du travail en ETS, des modalités contractuelles et statutaires des personnes assignées à une activité de travail contrainte et matériellement non reconnue, puisque non salariée. Elle s'attache également à cerner le vécu de l'assignation au travail, ainsi que le sens que les personnes lui attribuent dans leur trajectoire biographique et professionnelle.SUMMARYThis research investigates a specific and new form of labor, namely «temporary subsidized jobs» {emplois temporaires subventionnés, ETS) that have been developed since the late 1990s in Switzerland in the context of unemployment and social assistance benefits. Although ETS are specific to Switzerland, they echo similar «workfare» measures imposed on unemployed and welfare recipients introduced in recent years in almost all industrialized countries. Indeed, the evolution of public policies and the generalization of «active labour-market policies» {politiques d'activation) have become central to social protection in the majority of Western countries and have emerged in parallel to the expansion of work activities situated at the margins of traditional wage- labor.My analysis of the ETS phenomenon is informed by labor sociology and discusses the pertinence of a classical approach in grasping this hybrid and new work situation, which sets individual persons at the border between various administrative categories such as «unemployed», «inactive» and «at work». I investigate in particular the issue of contractual and statutory modalities imposed on persons who have been assigned to a form of activity that is both constraining as well as materially non-recognized (as it remains outside of traditional wage-labor forms). In order to understand ETS conditions and labor organization, my fieldwork consist of interviews of persons who have been assigned to it and observations. I investigate their personal experience, as well as the meaning that these individuals attribute to the ETS experience in the context of their biographical and professional trajectory.

Worlds of working poverty : Cross-national variation in the mechanisms that lead to poverty among workers

The objective of this paper is to distinguish between different types of working poverty, on the basis of the mechanisms that produce it. Whereas the poverty literature identifies a myriad of risk factors and of categories of disadvantaged workers, we focus on three immediate causes of working poverty, namely low wage rate, weak labour force attachment, and high needs, the latter mainly due to the presence of children (and sometimes to the increase in needs caused by a divorce). These three mechanisms are the channels through which macroeconomic, demographic and policy factors have a direct bearing on working households. The main assumption tested here is that welfare regimes strongly influence the relative weight of these three mechanisms in producing working poverty, and, hence, the composition of the working-poor population. Our figures confirm this hypothesis and show that low-wage employment is a key factor, but, by far, not the only one and that family policies broadly understood play a decisive role, as well as patterns of labour market participation and integration.

How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria

We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine di¤erential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the 'border regions'are de...ned narrowly, within a band of less than 50 kilometers, we can identify statistically signi...cant liberalization e¤ects on both employment and wages. While wages responded earlier than employment, the employment e¤ect over the entire adjustment period is estimated to be around three times as large as the wage e¤ect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.

A Behavioral Account of the Labor Market: The Role of Fairness Concerns

In this paper, we argue that important labor market phenomena can be better understood if one takes (a) the inherent incompleteness and relational nature of most employment contracts and (b) the existence of reference-dependent fairness concerns among a substantial share of the population into account. Theory shows and experiments confirm that, even if fairness concerns were to exert only weak effects in one-shot interactions, repeated interactions greatly magnify the relevance of such concerns on economic outcomes. We also review evidence from laboratory and field experiments examining the role of wages and fairness on effort, derive predictions from our approach for entry-level wages and incumbent workers' wages, confront these predictions with the evidence, and show that reference-dependent fairness concerns may have important consequences for the effects of economic policies such as minimum wage laws.

Smooth transition or permanent exit? Evidence on job prospects of displaced industrial workers

This article examines the job prospects of displaced industrial workers in Switzerland. Based on a survey of 1,203 workers who were dismissed after their manufacturing plants closed down, we analyse the determinants of re-employment, the sector of re-employment and the change in wages. Two years after displacement, a majority of workers were back in employment: 69% were re-employed, 17% un-employed and 11% retired. Amongst re-employed workers, two thirds found a job in manufacturing and one third in services. Contrary to a common belief, low-end services are not the collecting vessel of redundant industrial workers. Displaced workers aged 55 and older seem particularly vulnerable after a plant closes down: over 30% were long-term unemployed, and those older workers who found a new job suffered disproportionate wage losses. Advanced age-and not low education-appears as the primary handicap after mass redundancy.