infonet-economy

High-performance work systems give workers more discretion, thereby increasing effortproductivity but also shirking opportunities. We show experimentally that screening for workattitude and labor market competition are causal determinants of the viability of high-performancework systems, and we identify the complementarities between discretion, rent-sharing, andscreening that render them profitable. Two fundamentally distinct job designs emergeendogenously in our experiments: "bad" jobs with low discretion, low wages, and little rentsharing,and "good" jobs with high discretion, high wages, and substantial rent-sharing. Good jobsare profitable only if employees can be screened, and labor market competition fosters theirdissemination.