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Skills, preferences and rights: evolutionary complementarities in labor organization

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Abstract

In this paper, we model the interaction between types of workers and organizations through evolutionary game theory. In particular, we compare two paradigms of work organization: in the “hierarchical” regime, it is the organization itself that makes all relevant decisions, leaving little autonomy to its employees. Conversely, modern “networks” empower their workforce with the right to take initiatives, modulate routines and use their general knowledge in an instrumental way. In our framework, the choice to decentralize decisions is driven by the interplay between three elements: the complexity of production, the employees’ work preferences and skills and the labor-discipline implications of different organizational modes. By analyzing a series of match-specific effects, we derive parametrizations for which centralization dominates delegation and vice-versa. Explicit conditions under which the system remains stuck in Pareto-inferior situations are also obtained. Finally, we interpret our results to draw comments on the current contraction of job-discretion in OECD countries.

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Notes

  1. Braverman (1974) summarizes the philosophy of Taylorsim as follows: (i) dissociation of the labor process from the skills of the workers; (ii) separation of conception from execution, (iii) exploitation of this cognitive monopoly to control the mode of execution.

  2. For a paper analyzing the shirking-problem under centralization and delegation respectively, see Godlücke and Kranz (2012). For a classic treatment of the shirking-problem, see Shapiro and Stiglitz (1984) or Bowles (1985).

  3. In a neighboring stream of research that investigates the evolution of work pressure in Europe Green/McIntosh, 2001; Gallie 2005; Green 2004), the introduction of high involvement practices have been sometimes found responsible for the reduction of working dead-times and for the increase in the physical and psychological pressure to which employees are exposed. In this view, workplace autonomy «is perceived as a strategy for co-opting workers into a managerial perspective in order to preserve hierarchical authority without bureaucratic control» (Antonioli et al. 2009) and it is invoked as the primary cause of work intensification in Europe. In this literature, however, these new work practices have been conceptualized as Neo-Taylorist, so that they are better understood as an extension of the classical hierarchical mode of coordinating employees rather than as an alternative to it. Hence, the “challenge effect” discussed in this paper should not be confused with the “intensification effect” highlighted in this literature.

  4. Personnel and industrial psychologists have also analyzed the correlation between autonomy in teams and job-satisfaction. For a review, see Van Mierlo et al. (2006).

  5. See Acemoglu et al. (2007) and Christie et al. (2003) for empirical support.

  6. In formal terms, this occurs because \( \frac{g+s\left(1-{p}^H\right)}{g+s{p}^H}>1 \) when pH < 1/2, and since r < 1 by assumption, \( r<{\frac{g+s\left(1-{p}^H\right)}{g+s{p}^H}}_{\mid {p}^H<1/2} \) always.

  7. Meaning that all trajectories starting from an initial pair \( \left({x}_0,{y}_0\right)=\left(1,\hat{y}\right) \), \( \left({x}_0,{y}_0\right)=\left(0,\hat{y}\right) \), \( \left({x}_0,{y}_0\right)=\left(\hat{x},0\right) \) and \( \left({x}_0,{y}_0\right)=\left(\hat{x},1\right) \) will lie on the side with x = 1, x = 0, y = 0 and y = 1 respectively, where \( 0\le \hat{x}\le 1 \) and \( 0\le \hat{y}\le 1 \).

  8. In particular, Fig. 1a visualizes the third of the cases listed in point (i) of Proposition 1, that is, when condition (5) is satisfied but conditions (4) and (8) are not.

  9. Fig. 1b visualizes the case where condition (4) is not satisfied either, as can be seen from the fact that (1, 0) is a saddle.

  10. Observe that we have calculated \( {\varPi}_{\left({x}^{\ast },{y}^{\ast}\right)}^W \) from the second row of matrix (1). By construction however, the expected payoffs to the K and P strategies are equal in the (x∗, y∗) equilibrium, so we may have interchangeably calculated \( {\varPi}_{\left({x}^{\ast },{y}^{\ast}\right)}^W \) from the first row of matrix (1).

  11. As above, we have calculated \( {\varPi}_{\left({x}^{\ast },{y}^{\ast}\right)}^O \) from the second row of matrix (6). By construction, the expected payoffs to the N and H strategies are equal in the (x∗, y∗) equilibrium, so we may have interchangeably calculated \( {\varPi}_{\left({x}^{\ast },{y}^{\ast}\right)}^O \) from the first row of matrix (6).

  12. The possible Pareto-rankings of the relevant equilibria are multiple. However, the only cases that are Pareto-efficient for both populations are those reported in Proposition 2. The complete list of Pareto-rankings, along with the associated parametrisations, are given in the Appendix, which is available from the author upon request.

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Acknowledgments

The author would like to thank Angelo Antoci, Fabio Berton, Francesco Devicienti, Thomas Kochan, Alain Marciano, Ugo Pagano, Fabrizio Pompei, Michele Rosenberg, Massimiliano Vatiero, all the participants to the 2017 WINIR conference on “Institutions and open societies”, all the participants to the 2017 Trento Summer School “New thinking on the firm” and two anonymous referees for their very useful comments on earlier versions of the paper. The usual caveats apply.

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Università degli Studi di Torino. Ph.D. grant, Ph.D. program “Institutions, Economics and Law”; XXI cycle.

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  1. Department of Economics and Statistics “Cognetti De Martiis”, Università degli studi di Torino, Lungo Dora Siena, 100 A, 10153, Torino, TO, Italy

    Stefano Dughera

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Dughera, S. Skills, preferences and rights: evolutionary complementarities in labor organization. J Evol Econ 30, 843–866 (2020). https://doi.org/10.1007/s00191-020-00675-7

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