Incentives in a (Czech?) Bank

by Bogaard and Svejnar

HRM effects in services• Ann Bartel 2004 ILLR (100 citations in GS)

Branches of a Canadian bank, branch manager decides on HRM (incentives, participation, skills), 2 periods, controls for manager quality using employee survey: sales annual % change= f(K, L, HRM, branch_age, MgrTenure, MarketX, FE_year, FE_branch, FE_mgr )

• Ichniowski&Shaw: insider econometrics: is the goal to measure adoption effect in a randomly chosen branch or early adopters?

Literature• Evidence on HPWP: makes productivity go

up as well as wages and job satisfaction, profits don't change much, more likely to be adopted when skilled labor is abundant.

• Strategies: unit FE, time varying IV using industry adoption of HPWP from another country, matching.

Bogaard and SvejnarThis is not HPWP, but basic specialization.

(+) Nice new data, alternative empirical strategies (IV, matching), lots of robustness checks, model to aid interpretation. 56 pages (and I’ll ask for 10 more). Wow.

(-) Whole lotta IVing going on, head swimming.

Stress on foreign/domestic in CEE in 2003-07?

Magnitude of IV estimates huge (2x s.d.?).

ExperimentRegion and size explain adoption.

Bankers and advisors a different treatment.

Need more info on the design (var in X):

• Was this a surprise? Not much pre- data.

• Who chose order of implementation? (within size or regional groups) In particular, early adoption (in t=1) as pilot in best branches, low hanging fruit within & across branches?

IV strategy• IV idea: Regional/size adoption. Sequencing?

• Then add size to both first and second stage?

• IV is not similar to matching: IV is an across- group comparison (averaging unobs. within groups) zooming in on late adopters (LATE), whilst matching compares within groups.

• Show missing 500 obs., first stage F tests, pscore estimation, common support, balancing tests, dif-in-difs w/ matching implementation (within group pscore?) etc.

Minor Questions• Free riding or lower returns to late adopters?

• Care about side payments?

• Take out advisors in small branches in 2006?

• Can do better on local demand? Un. rates?

• No info on new footing (flow)?

• Study effect on wages?

• Must look at bad loans over time.