Minimum Wage and Individual Worker Productivity: Evidence from a Large Us

Abstract : We study the effect of increasing the statutory minimum wage on individual worker productivity. Within a workforce of base+commission salespeople from a large US retailer, and using a border-discontinuity research design, we document that a 65 cents (one standard deviation) increase in the minimum wage increases individual productivity (sales per hour) by 2%. With the help of a model, we seek evidence in favor of two distinct channels through which this productivity gain could arise: a demand increase, and an incentive effect due to the increase in compensation, part of which may be endogenous due the firm adjusting its compensation scheme. We find evidence only for the second, that is, the compensation scheme channel. Further, we find that the productivity gains are concentrated among low-productivity workers, and arise mostly during high-unemployment spells, which when read through the lens of our model suggests an efficiency-wage effect. We find some indication that the firm increases base pay in response to minimum wage increases, which is consistent with optimal contracting within our model, but the model suggests that the productivity gain is not fully mediated by this endogenous firm response

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What Do Referral Bonuses Do?

Abstract : In a 13-month RCT covering all grocery store jobs at a European grocery chain, 238 stores were randomized to pay different levels of bonus for employees to make referrals; the bonus amount reached up to 40% of monthly take-home salaries. Larger bonuses provide a statistically significant, but economically small boost to the number of referrals made. Despite this, the referral bonus programs are highly profitable for the firm, as referred workers are substantially more likely to stay and also boost other workers' retention. Consistent with the profitability of the bonuses, after the RCT, the firm rolled out a referral program across the entire firm and increased bonuses. In the post-RCT roll out, referral rates remain low for grocery jobs, but are high for non-grocery jobs, which havea much better reputation than grocery jobs. Surveys support that referrals remain low for grocery jobs despite significant bonuses because of the reputation of grocery jobs as undesirable.

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The Intangible Capital of Young Serial Entrepreneurs

Abstract : Serial entrepreneurs are talked about in the press, but little is known about the performance of their firms. Until better data becomes available on U.S. firms, we use panel data from Denmark on 216,524 newly founded firms for 2001-2013. Several key results are uncovered. First, when opening his first firm, the serial entrepreneur has higher sales and productivity than the novice, suggesting that the serial entrepreneur has better innate skills and other features, like better access to capital. Second, the serial entrepreneur opens his second firm with much higher productivity and sales than he had obtained when he closed his first firm. This evidence suggests that the serial entrepreneur is learning while running his first firm. His new knowledge – called intangible capital – is built into his second firm when it opens with higher sales. Young people learn the most from running their first firm. The young serial entrepreneurs are learning intangible things used when opening their second firm – such as developing marketing or customer networks – that the older serial entrepreneurs had learned before opening their first business.

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Geography and Employer Recruiting

Abstract : I analyze whether reducing geographic distance to high-wage jobs increases access to those employment opportunities. I collect office locations and campus recruiting strategies for over 70 prestigious banking and consulting firms, from 2000 to 2013. Using an event-study framework, I find firms are 2 times more likely to recruit at local universities after opening a nearby office, and 6 times more likely outside industry clusters. New target campuses outside industry clusters are less academically selective. The results suggest place-based policies may improve access to high-wage firms, and also suggest the importance of a university's local labor market for post-graduation outcomes.

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