UCL Discovery
UCL home » Library Services » Electronic resources » UCL Discovery

Social Connections and Incentives: Evidence from Personnel Data

Bandiera, O; Barankay, I; Rasul, I; (2009) Social Connections and Incentives: Evidence from Personnel Data. Econometrica , 77 (4) pp. 1047-1094. 10.3982/ECTA6496. Green open access

[thumbnail of 14520.pdf]
Preview
PDF
14520.pdf

Download (483kB)

Abstract

We present evidence on the effect of social connections between workers and managers on productivity in the workplace. To evaluate whether the existence of social connections is beneficial to the firm's overall performance, we explore how the effects of social connections vary with the strength of managerial incentives and worker's ability. To do so, we combine panel data on individual worker's productivity from personnel records with a natural field experiment in which we engineered an exogenous change in managerial incentives, from fixed wages to bonuses based on the average productivity of the workers managed. We find that when managers are paid fixed wages, they favor workers to whom they are socially connected irrespective of the worker's ability, but when they are paid performance bonuses, they target their effort toward high ability workers irrespective of whether they are socially connected to them or not. Although social connections increase the performance of connected workers, we find that favoring connected workers is detrimental for the firm's overall performance.

Type: Article
Title: Social Connections and Incentives: Evidence from Personnel Data
Open access status: An open access version is available from UCL Discovery
DOI: 10.3982/ECTA6496
Publisher version: http://dx.doi.org/10.3982/ECTA6496
Language: English
Keywords: Favoritism, managerial incentives, natural field experiment.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14520
Downloads since deposit
550Downloads
Download activity - last month
Download activity - last 12 months
Downloads by country - last 12 months

Archive Staff Only

View Item View Item