(click “read more” to view a Q&A with the authors)
Volume 27, Issue 1, Spring 2018
We investigate a crucial event for job satisfaction: changing one’s workplace. For representative German panel data, we show that the reason why the previous employment ended is strongly linked to satisfaction with the new job. Workers initiating a change of employer experience extraordinarily high job satisfaction, though in the short term only. To investigate causality, we exploit the event of plant closure as an exogenous trigger of job switching. In this case, we find no significantly positive effect of job changes on job satisfaction. Our findings complement research on workers’ well-being and concern labor market policies and human resource management.
We develop an O-ring production function characterized by specialization and division of labor and where shirking or negative shocks can have major adverse consequences. We show that when the principal can monitor individual output, the firm tends be large (potentially larger than first best), with a high degree of specialization and division of labor, weak incentives, and low pay as in traditional nonunion manufacturing. Moral hazard can only limit the size of the firm relative to the first best when the principal can only monitor team output, in which case the firm has the opposite characteristics.