Discussion Paper No. 412
August 5, 2023
Employee Performance and Mental Well-Being: The Mitigating Effects of Transformational Leadership during Crisis
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Abstract:
The positive role of transformational leadership on productivity and mental wellbeing has long been established. Transformational leadership behavior may be particularly suited to navigate times of crisis which are characterized by high levels of complexity and uncertainty. We exploit quasi-random assignment of employees to managers and study the role of frontline managers’ leadership styles on employees’ performance, work style, and mental well-being in times of crisis. Using longitudinal administrative data and panel survey data from before and during the Covid-19 pandemic, we find that frontline managers who were perceived as having a more transformational leadership style before the onset of the pandemic, lead employees to better performance and mental well-being during the pandemic.
Keywords:
leadership; frontline managers; labor-management relations; organizational behavior;
JEL-Classification:
M54; M12; J53;
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Discussion Paper No. 411
July 28, 2023
Biased Wage Expectations and Female Labor Supply
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Wage growth occurs almost exclusively in full-time work, whereas it is close to zero in part-time work. German women, when asked to predict their own potential wage outcomes, show severely biased expectations with strong over-optimism about the returns to part-time experience. We estimate a structural life-cycle model to quantify how beliefs influence labor supply, earnings and welfare over the life cycle. The bias increases part-time employment strongly, induces flatter long-run wage profiles, and substantially influences the employment effects of a widely discussed policy reform, the introduction of joint taxation. The most significant impact of the bias appears for college-educated women.
Keywords:
returns to experience; biased beliefs; part-time work; dynamic life-cycle models; ;
JEL-Classification:
D63; H23; I24; I38; J22; J31;
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Discussion Paper No. 410
July 18, 2023
Does Unfairness Hurt Women? The Effects of Losing Unfair Competitions
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How do men and women differ in their persistence after experiencing failure in a competitive environment? We tackle this question by combining a large online experiment (N=2,086) with machine learning. We find that when losing is unequivocally due to merit, both men and women exhibit a significant decrease in subsequent tournament entry. However, when the prior tournament is unfair, i.e., a loss is no longer necessarily based on merit, women are more discouraged than men. These results suggest that transparent meritocratic criteria may play a key role in preventing women from falling behind after experiencing a loss.
Keywords:
competitiveness; gender; fairness; machine learning; online experiment;
JEL-Classification:
C90; D91; J16; C14;
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Discussion Paper No. 409
July 5, 2023
(Dis)honesty and the Value of Transparency for Campaign Promises
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Promise competition is prevalent in many economic environments, but promise keeping is often difficult to observe. We study the value of transparency for promise competition and ask whether promises still offer an opportunity to honor future obligations when outcomes do not allow for observing promise keeping. Focusing on campaign promises, we show theoretically how preferences for truth-telling shape promise competition when promise keeping can(not) be observed and identify the causal effects of transparency in an incentivized experiment. Transparency leads to less promise breaking but also to less generous promises. Rent appropriations are higher in opaque institutions though only weakly so when not fully opaque. Instrumental reputational concerns and preferences for truth-telling explain these results.
Keywords:
campaign promises; promise breaking; voting; lying costs; preferences for truth-telling; political Economy; theory; experiment;
JEL-Classification:
C91; C92; D72; D73; D91;
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Discussion Paper No. 408
State Repression, Exit, and Voice
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What is the political legacy of state repression? Using local variation in state repression during the Khmer Rouge genocide in Cambodia, we investigate the effects of repression on political beliefs and behavior. We find that past state repression decreases votes for an authoritarian incumbent while enhancing electoral competition and support for democratic values four decades later. At the same time, individuals become more cautious in their interactions with the local community: they exhibit less trust, participate less in community organizations, and engage less with local government. Our theoretical model suggests that these opposing forces arise because experiencing repression bolsters preferences for pluralism while also heightening the perceived cost of dissent. Consequently, citizens are more likely to support the opposition in elections (voice) but engage less in civil society (exit) to avoid publicly revealing their political views. Exploring channels of persistence, we demonstrate that repression cultivates a lasting fear of violence as a societal threat, and that genocide memorials and remembrance ceremonies maintain the collective memory of the atrocities.
Keywords:
state repression; political beliefs and behavior; collective memory; state-society relations;
JEL-Classification:
D7; N4; O1;
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Discussion Paper No. 407
Female Education and Social Change
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Does access to education facilitate the emergence of a human capital elite from which social activists, and thus, social change can emerge? Assembling a city-level panel of the political, intellectual, and economic elite throughout German history, we find that the opening of schools providing secondary education for women increased their representation among the human capital elite. These elites challenged the status quo and developed critical ideas that resonated in cities with higher human capital, connecting women to form a social movement. We find no evidence of other city-specific indicators of economic and gender-specific cultural change affecting our results. Differential returns to education are also unrelated to the increasing representation of women among the human capital elite, as the opening of gender-specific schools has no impact on the opposite gender.
Keywords:
female education; human capital; women's rights;
JEL-Classification:
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Discussion Paper No. 406
June 30, 2023
Social Preferences under the Shadow of the Future
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Social interactions predominantly take place under the shadow of the future. Previous literature explains cooperation in indefinitely repeated prisoner’s dilemma as predominantly driven by self-interested strategic considerations. This paper provides a causal test of the importance of social preferences for cooperation, varying the composition of interactions to be either homogeneous or heterogeneous in terms of these preferences. Through a series of pre-registered experiments (N = 1,074), we show that groups of prosocial individuals achieve substantially higher levels of cooperation. The cooperation gap between prosocial and selfish groups persists even when the shadow of the future is increased to make cooperation attractive for the selfish and when common knowledge about group composition is removed.
Keywords:
cooperation; indefinitely repeated games; prisoner’s dilemma; social preferences; experiment;
JEL-Classification:
C73; C91; C92;
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Discussion Paper No. 405
The Taxation of Couples
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Are reforms towards individual taxation politically feasible? Are they desirable from a welfare perspective? We develop a method to answer such questions and apply it to the US federal income tax since the 1960s. Main findings are: As of today, Pareto-improvements require a move away from joint taxation. Revenue-neutral reforms towards individual taxation are not Pareto-improving, but attract majoritysupport. Such reforms are rejected by Rawlsian welfare measures and supported by ones with weights that are increasing in the secondary earner’s income share. Thus, there is a tension between the welfare of “the poor” and the welfare of “working women.”
Keywords:
taxation of couples; tax reforms; optimal taxation; political economy; non-linear income taxation;
JEL-Classification:
C72; D72; D82; H21;
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Discussion Paper No. 404
I'll Try That, Too - A Field Experiment in Retailing on the Effect of Variety During Display Promotions
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The effect of variety on consumer choice has been studied extensively, with some stream of literature showing the positive effects on choice and others arguing that too many alternatives may result in negative consequences (i.e., choice deferral or no purchase at all), often referred to as choice overload. In a field experiment with a major chocolate brand conducted at a German retail chain, we test for variety during a price and display promotion. Participating stores either include the full variety of products on the display or a reduced selection (low variety). Contrary to the literature on choice overload, we find a significantly positive effect of the display promotion on unit sales, which is stronger for stores with high variety. Further findings show a stronger promotion uplift for less popular products in stores with high variety on the display. This suggests that more variety may increase consumers’ willingness to try new products, when the financial risk is low. We also test for the effect of product distribution on displays by analysing the number of facings. Additionally, we introduce an approach to determine an optimal space allocation of products on the display. Our findings suggest that an even distribution results in the highest profits for the retailer. We contribute to the literature on variety for consumer choices by offering insights from actual purchases with store-level scanner data of display promotions.
Keywords:
variety; retailing; in-store display; field experiment;
JEL-Classification:
M31 Marketing; C23; C93; D12;
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Discussion Paper No. 403
June 28, 2023
Persecution and Escape
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We study the role of professional networks in facilitating emigration of Jewish academics dismissed from their positions by the Nazi government. We use individual-level exogenous variation in the timing of dismissals to estimate causal eects. Academics with more ties to early émigrés (emigrated 1933-1934) were more likely to emigrate. Early émigrés functioned as “bridging nodes” that facilitated emigration to their own destination. We also provide evidence of decay in social ties over time and show that professional networks transmit information that is not publicly observable. Finally, we study the relative importance of three types (family, community, professional) of social networks.
Keywords:
professional networks; high-skilled emigration; Nazi Germany; Jewish academics; universities;
JEL-Classification:
I20; I23; I28; J15; J24; N30; N34; N40; N44;