Job Insecurity
By: Kuvalekar, Aditya and Elliot, Lipnowski
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Material type: 
BookPublisher: American Economic Journal Microeconomics Description: 12(2), May, 2020: p. 188-229.Subject(s): Human Capital; Skills; Occupational Choice; Labor Productivity
In:
American Economic Journal : MicroeconomicsSummary: We examine the relationship between job security and productivity in a fixed wage worker-firm relationship facing match quality uncertainty. The worker's action affects both learning and current productivity. The firm, seeing worker behavior and outcomes, makes a firing decision. As bad news accrues, the firm cannot commit to retain the worker. This creates perverse incentives: the worker strategically slows learning, harming productivity. We fully characterize the unique equilibrium in our continuous-time game. Consistent with some evidence in organizational psychology, the relationship between job insecurity and productivity is U-shaped: a worker is least productive when his job is moderately secure. - Reproduced
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 12(2), May, 2020: p. 188-229 | Available | AR124166 |
We examine the relationship between job security and productivity in a fixed wage worker-firm relationship facing match quality uncertainty. The worker's action affects both learning and current productivity. The firm, seeing worker behavior and outcomes, makes a firing decision. As bad news accrues, the firm cannot commit to retain the worker. This creates perverse incentives: the worker strategically slows learning, harming productivity. We fully characterize the unique equilibrium in our continuous-time game. Consistent with some evidence in organizational psychology, the relationship between job insecurity and productivity is U-shaped: a worker is least productive when his job is moderately secure. - Reproduced
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