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The Relationship between Delegation and Incentives Across Occupations: Evidence and Theory
Author(s) -
De Varo Jed,
Prasad Suraj
Publication year - 2015
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12077
Subject(s) - delegation , incentive , empirical evidence , simple (philosophy) , control (management) , business , demographic economics , labour economics , economics , microeconomics , management , philosophy , epistemology
A large literature suggests that incentive pay and delegation of worker authority are positively related. Using data from a large cross section of B ritish establishments, we show that the positive relationship found in the empirical literature masks a stark difference across jobs. Classifying jobs into two categories ( complex jobs, including professional, technical and scientific occupations, and simple jobs, consisting of all other non‐managerial occupations) we find a positive relationship for simple jobs and a negative relationship for complex jobs. To explain this negative relationship, we develop a model where stronger incentives distort a worker's decisions towards low risk‐return tasks.