The Economic Payoff of Creating Good Job Conditions: Theory and Evidence from Latin America

Based on Akerlof and Kranton (2005), who argue that group identity and social norms influence individual preferences towards work effort, a model is developed to understand why firms create good job conditions, taking into account the cost of implementing them and their impact on wages and productivity. Then, using individual-level data from the Gallup World Poll for 18 Latin American countries, the main predictions of the model are tested using propensity score matching. We find a positive link between good job conditions, workers’ labor income and productivity when there are several simultaneous signals of a good work environment. We conclude that there is a positive payoff of investing in good job conditions for both workers and firms.


Issue Date:
2014
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/169810
Total Pages:
37
JEL Codes:
J24; J64; M12; M54; O54




 Record created 2017-04-01, last modified 2017-08-27

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