Job Market Paper

Gig Workers and Performance Pay: A Dynamic Equilibrium Analysis of an On-Demand Industry

In many online product markets, firms manufacture and supply products almost immediately after receiving orders. Thus, firms need to ensure that their workers satisfy product demand, which can vary over time, in a cost-effective way. This paper develops and estimates a dynamic equilibrium model of firm and worker behavior in an on-demand production context. The firm solves a dynamic discrete choice cost minimization model in which it faces uncertainty about future product demand and workers' productive capacity. The firm chooses to employ two types of workers – gig workers and permanent – and it sets parameters of a compensation scheme that is a mix of salary and performance-based incentives to elicit worker effort. Heterogeneous workers solve a daily effort choice problem given the compensation scheme offered by the firm. I estimate the model and perform an out-of-sample validation of the model using panel data from an online, global manufacturer that produces customized items. The data include detailed measures of workers' output and output quality under varying compensation schemes. I find that gig workers and permanent workers exhibit different production patterns and that gig workers are much more responsive to incentive pay. I embed the workers' optimal effort decisions into the firm's dynamic cost minimization problem and use simulation methods to derive optimal labor force composition and compensation schemes. I show that varying compensation scheme over time and using a mix of gig and permanent workers provide the flexibility that the firm needs to effectively operate in an on-demand customized production environment.

Working Papers

Family Health Spillovers: Evidence from the RAND Health Insurance Experiment

Revise and Resubmit in the Journal of Health Economics

I study how family spillovers shape health care consumption through two main sources: a learning channel whereby family members share information regarding their health insurance plan, and a behavioral channel whereby risk perception and habits are shared and transmitted. I exploit two types of sudden health shocks to identify a causal effect operating through each channel: a spouse’s non-fatal heart attack or stroke and a severe injury to a child. I incorporate these shocks into an event-study and a synthetic control event-study frameworks to quantify the effect of spillovers on health care consumption of a non-injured adult family member. I find a significant behavioral spillover effect of a more than 70% increase in medical spending of preventive care over a two-year horizon. Moreover, I find a strong and persistent spillover effect associated with the family learning about their health insurance plan that amounts to an average increase in medical spending of more than 100% relative to prior to the health shock. While the first result is in line with previous findings in the literature, the second is novel. I demonstrate that learning about health plan cost structure and coverage benefits are means in which the learning-spillover channel operates and that acquired knowledge promotes consumption of preventive treatments.

Never Too Much? High Levels of Psychological Safety Diminish Performance (with Peter Cappelli and Liat Eldor)


Under Review


While psychological safety climate is widely seen as having a positive relationship with work performance, there are compelling reasons why that may not always apply. Consistent with the theoretical principle of a too-much-of-a-good-thing effect, we propose that high levels of psychological safety climate can actually harm performance. We also use cognitive representation theory to propose that the negative effect of high levels of psychological safety can be moderated by perceptions of accountability. We test this model using two independent samples: across 227 retail branches over four years (Study 1) and across 82 high-tech organization units (Study 2). Results of both Study 1 and Study 2 show, as traditionally hypothesized, that moderate levels of psychological safety climate have a strong and positive effect on performance outcomes, but at high levels, the relationship reverses and decreases. Perceptions of accountability moderate the negative effect. Finally, we find that collective engagement mediates the overall nonlinear relationship with performance and the interactive effect of psychological safety climate and accountability on performance. These results help identify boundary conditions on the psychological safety climate construct. They also extend research on psychological safety climate to organization-level outcomes that have real-world consequences.

Sitting Habits and Productivity: Evidence from a Randomized Field Experiment

Modern life has made us sedentary and our health suffers in consequence. Although the obvious direct costs of a sedentary lifestyle are health care expenses, there is an additional crucial path of indirect costs associated with the decline of workers’ productivity, as worse health can lead to performance decrement and more work absences. I conduct a randomized control field experiment in a workplace with sedentary jobs to shed light on this indirect path. I supply workers with a “smart pillow”, a new technological device that provides real-time biofeedback on sitting posture and aims to improve workstation ergonomics. By combining workers’ subjective and objective job performance measures with their detailed sitting records over time, I study the link between workers’ health and productivity, as well as the sitting habit-forming process. More generally, the implications of this study concern workers’ health in a modern work lifestyle both in the short run, as a result of an immediate improvement in sitting habits and adoption of a dynamic working environment, as well as the long run, after the treatment is removed.

Work in Progress

Anchoring Worker's Pay Expectations: Evidence from the Gig Economy

The Negative Consequences of Being Too Busy [working title] (with Peter Cappelli and Liat Eldor)

Internal and External Hiring Decisions Based on a Working Excitement Scale [working title] (with Peter Cappelli and Liat Eldor)