Returns to the Workplace
The Payoffs of Higher Pay: Labor Supply and Productivity Responses to a Voluntary Firm Minimum Wage
Natalia Emanuel & Emma Harrington
Federal Reserve Working Paper, February 2026
Abstract:
What are the returns to firms of paying more? We study a Fortune 500 firm's voluntary firm-wide $15/hour minimum wage, which affected some warehouses more than others. Using a continuous difference-in-differences design, we find that a $1/hour pay increase (5.5 percent) halves worker departures, reduces absenteeism by 18.6 percent, and increases productivity (boxes moved per hour) by 5.7 percent. These productivity gains fully defrayed increased labor costs, offsetting the firm's incentive to mark down wages. We develop a simple model that connects efficiency-wage incentives and monopsony power, showing how these forces can counterbalance each other to keep wages closer to workers' marginal revenues.
How Do Different Remote Work Arrangements Impact Employee Job Satisfaction and Retention?
Christos Makridis & Jason Schloetzer
Management Science, forthcoming
Abstract:
We study how working remotely impacts employee job satisfaction and retention using unique data on the remote work arrangements of nearly 165,000 employees. Our findings show that the positive association between working remotely more frequently and job satisfaction diminishes substantially after controlling for employee compensation, occupation, demographics, and workplace characteristics (e.g., feeling appreciated at work). Moreover, remote work is associated with a higher intention to leave the firm after considering these other factors. This suggests that workplace characteristics beyond remote work have a more consequential association with job satisfaction and retention than remote work itself. Using variation in job tasks and worker-manager relationships, we find that working remotely more frequently confers higher job satisfaction for employees in low-coordination roles or those who perceive their direct supervisors unfavorably. The findings suggest that remote work plays a more limited role in shaping job satisfaction and retention relative to broader workplace characteristics, and that its value depends on how well work arrangements are matched to employees' strengths, coordination requirements, and managerial context.
The referral penalty: Decreased perceptions of merit undermine helping behavior toward referred employees
Teodora Tomova Shakur & Rellie Derfler-Rozin
Journal of Applied Psychology, forthcoming
Abstract:
Employee referrals are commonly used by organizations due to their numerous benefits. However, it remains unclear how organizational incumbents, who are uninvolved in the hiring process, perceive and react to referral beneficiaries. Although traditional views suggest that the presence of a referral signals merit, incumbents' perceptions may differ. We theorize that incumbents are more likely to perceive referral beneficiaries as less merited than nonreferred employees due to perceived legitimacy concerns stemming from a simplified view that reliance on network contacts de facto compensates for lower qualifications. Drawing on equity theory, we then theorize that lower merit perceptions lead to less positive and more negative behaviors toward referral beneficiaries as an attempt to restore the equilibrium between beneficiaries' perceived inputs (e.g., driven by perceived lower merit) and outputs (e.g., being on payroll). Sampling employees from industries in which referrals are normative (Study 1a) and from a cultural context that is positively predisposed toward referrals (Study 1b) confirmed our theorizing. In a subsequent study, aiming to enhance the generalizability of our findings, we found supporting evidence for perceived equity violations, leading incumbents to engage in corrective behaviors toward referral beneficiaries (Study 2). Finally, testing our hypotheses more conservatively, we found that negative attributions toward referral beneficiaries persisted even when the referred employees had demonstrated high performance, thereby underscoring the robustness of our findings (Study 3). This article elucidates important unintended consequences of one of the most widely used recruitment methods -- employee referrals -- and draws implications for both theory and practice.
Performance Pay and Mental Health: Differences by Pay Scheme
Benjamin Adams
Industrial Relations, forthcoming
Abstract:
Anxiety and depression contribute to billions of dollars of lost productivity each year. This work is the first to examine the impact of performance pay on self-reported measures of anxiety and depression in either the U.S. or Europe, using typical U.S. survey data. It finds no significant impact of performance pay overall but finds that stock options are associated with decreased rates of anxiety and depression, while bonuses are associated with increased rates of anxiety and depression. The heterogeneity indicates a need for further research into the mechanisms by which performance pay impacts mental health.
Does acqui-hiring pay off? An empirical investigation of founder retention
Nikolaus Seitz & Erik Lehmann
Small Business Economics, January 2026, Pages 361-391
Abstract:
In the fiercely competitive global talent landscape, even tech giants struggle to attract and retain top-tier entrepreneurial talent. To address this challenge, companies increasingly employ acqui-hiring -- a strategic approach based on mergers and acquisitions aimed at acquiring startups primarily for their human capital. However, empirical evidence supporting the effectiveness of acqui-hiring is limited and contentious. Our study aims to fill this gap by investigating the retention decisions of acqui-hired founders, who are central to the success of such acquisitions. Leveraging a dataset comprising 454 acqui-hired founders from 241 transactions by Google and Meta (Facebook), our findings highlight the difficulty of retaining individual entrepreneurs compared to entire co-founder teams, and underscore the importance of maintaining co-founders' hierarchy. Our research contributes to the strategic entrepreneurship literature by exploring nuanced organizational design decisions in intrapreneurship and startup-corporate collaborations, shedding light on the efficacy of structural integration for knowledge and innovation transfer.
Vanity in Teams
Daniel Dorn & Pramod Kumar Yadav
Journal of Banking & Finance, March 2026
Abstract:
We hypothesize that vanity amplifies realization utility in teams; admitting mistakes is particularly painful when mistakes have to be admitted to self and colleagues. Consistent with the Vanity hypothesis, U.S. stock funds run by teams hold on to losers when losers were initiated by a subset of the team (to avoid admitting a mistake to their non-initiating colleagues), when initiators of loser positions are more experienced (to avoid losing authority by admitting mistakes to junior colleagues), and when all colleagues agree that a position is a loser. Vanity is costly -- losers held underperform by a risk-adjusted 1% annually.
Scandal, Associative Stigma, and Sorting in Labor Markets: Archival and Experimental Evidence
Jihyeon Kim, Heejung Byun & Joseph Raffiee
Management Science, forthcoming
Abstract:
Stigma stemming from managerial scandals often spreads beyond the implicated transgressor and contaminates other actors via stigma by association. We study how associative stigma resulting from scandals involving managerial misconduct affects subordinate worker careers. We extend prior work by distinguishing between managerial misconduct in the professional domain from managerial misconduct in the personal domain and theorize that this distinction will affect the severity of associative stigma, audience evaluations, and associated workers' labor market outcomes. Our multimethod empirical approach combines archival analysis of administrative employment records with a series of preregistered, randomized vignette experiments. Our archival analysis demonstrates that workers associated with managers who engage in misconduct sort into organizations with a history of managerial misconduct. The magnitude of this effect is amplified when associative stigma arises from managerial misconduct in the personal domain, a pattern driven by the fact that associative stigma arising from managerial misconduct in the professional domain tends to carry a relatively stronger labor market penalty and increased likelihood of worker exit from the industry. Our experimental studies, which measure employment intentions of workers and hiring intentions of employers, suggest that the psychological mechanism of stigma apprehension plays a role in facilitating the sorting that we observe, a result consistent with the interpretation that sorting emerges from greater tolerance of actors stigmatized by association rather than a taste for misconduct and thus, affirmative assortative matching. These findings contribute to the stigma literature by showing how stigma by association effects vary across audiences and linking this variation to sorting outcomes.
Learning to Quit? A Multi-Year, Multi-Site Field Experiment with Innovation-Driven Entrepreneurs
Esther Bailey et al.
NBER Working Paper, January 2026
Abstract:
We use a randomized experiment with 553 science- and technology-based startups in 12 co-working spaces across the US to evaluate the effects of intensive, short-term entrepreneurial training programs on survival and performance for innovation-driven startups. Treated startups are more likely to shut down their businesses and do so sooner than control startups. Conditional on survival, however, treated startups are more likely to raise external funding for their ventures, raise funding faster, and raise more funding than the control group; they also exhibit higher employment and revenue. Treated founders are less likely to found a new startup after shutdown. Our findings are consistent with practitioner arguments that early entrepreneurship training interventions can help entrepreneurs with less viable ventures "rationally quit" ("fail fast"). We use machine learning techniques (causal random forest) to provide exploratory insights on the most impacted subgroups.