Working Paper: NBER ID: w17623
Authors: Gautam Bose; Kevin Lang
Abstract: We analyze a firm's job-assignment and worker-monitoring decisions when workers face occasional crises. Firms prefer to assign good workers to a difficult task and to not employ bad workers. Firms observe failures but only observe successfully resolved crises if they monitor the worker. If monitoring costs are positive but sufficiently small, for a range of probabilities that the worker is good, the firm assigns the worker to a low task (less sensitive to crises) and monitors her. At probabilities below this range and not too much above it, she is assigned to the low task and not monitored. At high probabilities of being good, she is assigned to the difficult task. We analyze the implications for internal labor markets of the case where a worker has the same ex ante probability of being good at all firms and learning is about ability at this particular firm.
Keywords: No keywords provided
JEL Codes: J01; J41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| worker quality (J81) | task assignment (C78) |
| monitoring (E63) | identification of worker ability (J29) |
| monitoring (E63) | task assignment (C78) |
| initial beliefs about worker quality (J24) | monitoring decisions (D70) |
| monitoring decisions (D70) | task assignments (M54) |
| time passing without a crisis (H12) | beliefs about worker quality (J24) |
| beliefs about worker quality (J24) | promotions (M51) |