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Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm

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  • Svejnar, Jan
  • Bogaard, Hein

Abstract

We exploit organizational reforms in a foreign-owned bank in Central-East Europe to study the implementation of modern HRM policies in an emerging market context. We have branch-level data and use our knowledge of the process that led to the adoption of the reforms to implement two estimators that address endogeneity bias in a complementary fashion: an IV approach and Generalized Propensity Score estimation. Our results show that some of the reforms had a positive impact on productivity, but they also underscore the risks of quantity-based incentives where quality is important.

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  • Svejnar, Jan & Bogaard, Hein, 2014. "Incentive Pay and Performance: Insider Econometrics in a Multi-Unit Firm," CEPR Discussion Papers 9789, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9789
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    More about this item

    Keywords

    Banking; Central and eastern europe; Endogeneity of hrm policies; Foreign ownership; Incentives; Insider econometrics;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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