Worker Morale and Effort: Is the Relationship Causal?

24 Pages Posted: 10 Oct 2018

See all articles by Wolter Hassink

Wolter Hassink

Utrecht University

Roberto M. Fernandez

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: December 2018

Abstract

We investigate a unique setting which enables us to distinguish between two theories of work performance. A standard labor supply framework implies a negative effect of the nonpecuniary cost of work on the employee's effort. In contrast, a model of worker morale that is consistent with a widely used theory of Akerlof and Yellen (QJE, 1990) predicts this negative effect is stronger (weaker) for low‐morale (high‐morale) workers. We exploit a natural experiment design of a firm relocation from Milwaukee's Central Business District to the area's suburban ring in 1992. There is an exogenous source of variation on the adjusted commuting distance among those who stay at the firm. Some workers received a windfall gain, whereas other workers experienced an unforeseen cost in longer commuting time. The estimates suggest that low‐morale workers are responsive to the shock in commuting time for some of the dimensions of morale. We conclude that the results give some indication of the model of worker morale.

Suggested Citation

Hassink, Wolter and Fernandez, Roberto M., Worker Morale and Effort: Is the Relationship Causal? (December 2018). The Manchester School, Vol. 86, Issue 6, pp. 816-839, 2018, Available at SSRN: https://ssrn.com/abstract=3262902 or http://dx.doi.org/10.1111/manc.12210

Wolter Hassink (Contact Author)

Utrecht University ( email )

Vredenburg 138
Utrecht, 3511 BG
Netherlands

Roberto M. Fernandez

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

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