Market Competition and the Effectiveness of Performance Pay
It is well established that the effectiveness of pay-for-performance (PfP) schemes depends on employee- and organization-specific factors. However, less is known about the moderating role of external forces such as market competition. Our theory posits that competition generates two counteracting effects—the residual market and competitor response effects—that vary with competition and jointly generate a curvilinear relationship between PfP effectiveness and competition. Weak competition discourages effort response to PfP because there is little residual market to gain from rivals, whereas strong competition weakens incentives because an offsetting response from competitors becomes more likely. PfP hence has the strongest effect under moderate competition. Field data from a bakery chain and its competitive environment confirm our theory and let us refute several alternative interpretations.
Field experiments have provided ample evidence of ethnic and racial discrimination in the labour market. Less is known about how discrimination varies in multi-ethnic societies, where the ethnic composition of populations is different across locations. Inter-group contact and institutional arrangements for ethnic minorities can mitigate the sense of group threat and reduce discrimination. To provide empirical evidence of this, we conduct a field experiment of ethnic discrimination in Russia with a sample of over 9,000 job applications. We compare ethnically homogeneous cities and cities with ethnically mixed populations and privileged institutional status of ethnic minorities. We find strong discrimination against visible minorities in the former but much weaker discrimination in the latter. These findings demonstrate how institutions and historical contexts of inter-group relations can affect ethnic prejudice and discrimination.
This article presents the findings of the first field experiment – a resume correspondence study – on age discrimination in the Russian labour market. Correspondence studies are nowadays viewed as the most objective way to test for hiring discrimination. This method consists of sending pairs of curricula for job offers, very similar in everything except the trait to be analyzed (age in our case). Data collection for the presented study was conducted in February-March 2018. Pairs of matched applications, one from a fictitious 29-year-old female applicant and one from a fictitious 48-year-old female applicant, were sent to 341 employers with job openings for accountants in Moscow posted on the one of the most popular job search websites. It turned out that the probability of receiving an invitation for an interview for an older candidate is 24-32%, whereas for a younger candidate 45-52%. Thus, the positive callback ratio is 1.8-2.5. The indicator of “net discrimination” calculated as the difference in the shares of positive callbacks from the number of vacancies for which at least one response is received, for the younger and older candidates is 37-49%. Comparing with the results of the existing studies, it turns out that the obtained discrimination level is quite high. Taking into account the population aging, a reduction in the workforce and the inevitable prospect of an increase in the retirement age, measures must be taken to combat age discrimination and allow older people to work on an equal basis with young people.
The article shortly describes a teacher growth model initiative known as Race to the Top.