Working Paper: CEPR ID: DP16926
Authors: Arash Nekoiei
Abstract: Most of the key amenities of our today jobs did not emerge in private contracts; instead, they appeared in collective agreements and regulations. I argue that understanding this observation can guide the provision of future amenities. I show that markets underprovide an amenity if workers who value it more have a lower average unobserved productivity. Universal mandate of such amenities improves social welfare when taste-productivity correlation is high. Policies that leverage heterogeneity in the taste-productivity correlation by observable characteristics, e.g., quota and tagging, dominate mandate in the presence of a mild adverse selection.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| taste-productivity correlation (L15) | market provision of amenities (H49) |
| lower average unobserved productivity (O49) | underprovision of amenities (H42) |
| adverse selection (D82) | inefficiencies in labor market (J49) |
| universal mandate for amenities (H49) | improve social welfare (D60) |
| quotas and tagging (C80) | enhance amenity provision (Q26) |
| taste-productivity correlation (L15) | market failure in amenity provision (H41) |
| mandate (D70) | increase overall welfare (D69) |