Subsidy, Shirking, and Strategy: Assessing the Effect of Consumption Subsidy on Worker Effort and Intervening Strategy
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SeriesBrown Bag Seminars General Economics
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SpeakerBrighton (Ratchanon) Chotiputsilp (Erasmus University Rotterdam)
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FieldEmpirical Microeconomics, Human Resources and Organizational Behaviour
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LocationErasmus University Rotterdam, E building, Kitchen/Lounge E1
Rotterdam -
Date and time
November 21, 2024
12:00 - 13:00
Abstract
I study how workers and managers in a firm respond to a temporary
government consumption subsidy program. Using exogenous variation in
eligibility criteria, I show that workers who become eligible for the program
reduce their effort at work and shirk more. As a result, these workers earn
less in performance-based pay, leading to a net decrease in their overall
take-home pay. Additionally, I find that managers strategically intervene to
mitigate the impact of diminished worker efforts on overall production efficiency.
Managers reallocate more difficult tasks to non-shirking workers while
assigning less demanding tasks to those who reduce their effort. In addition to
task reallocation, managers also implement stricter disciplinary measures to
address shirking behavior. This study highlights the potential unintended
consequences of the consumption subsidy program on both worker and firm
outcomes and underscores the importance of management in safeguarding
productivity and efficiency in response to shocks.