David I. Levine

Participation, Productivity, and the Firm's Environment

While increasing worker participation in decision making can often increase productivity, it remains relatively rare in the United States. This article discusses how the product, labor, and capital market conditions that firms face can work against participatory firms and why the free market may provide too little encouragement for worker participation.

Cohesiveness, productivity, and wage dispersion

When work groups support the goals of the firm, firms will want to narrow wage dispersion in order to increase group cohesiveness and productivity. This narrowing of wage differentials has several implications: (1) Firms will pay wages that vary less than marginal productivity; (2) Firms that must pay the high end of their wage distribution a particularly high wage will pay all workers particularly high wages; (3) The market ignores the rent that egalitarian wages provide to low-wage workers, and the rent will be under-provided in equilibrium. At the margin, increasing the number of workers in cohesive firms and/or increasing wages for the low end of the wage distribution will increase the total amount of rents, raising national output.

CABOB: A Fast Optimal Algorithm for Winner Determination in Combinatorial Auctions

Combinatorial auctions where bidders can bid on bundles of items can lead to more economically efficient allocations, but determining the winners is \scr{N}\scr{P}-complete and inapproximable. We present CABOB, a sophisticated optimal search algorithm for the problem. It uses decomposition techniques, upper and lower bounding (also across components), elaborate and dynamically chosen bid-ordering heuristics, and a host of structural observations. CABOB attempts to capture structure in any instance without making assumptions about the instance distribution. Experiments against the fastest prior algorithm, CPLEX 8.0, show that CABOB is often faster, seldom drastically slower, and in many cases drastically faster---especially in cases with structure. CABOBs search runs in linear space and has significantly better anytime performance than CPLEX. We also uncover interesting aspects of the problem itself. First, problems with short bids, which were hard for the first generation of specialized algorithms, are easy. Second, almost all of the CATS distributions are easy, and the run time is virtually unaffected by the number of goods. Third, we test several random restart strategies, showing that they do not help on this problem---the run-time distribution does not have a heavy tail.

Reinventing the workplace : how business and employees can both win

What is the future shape of the American workplace? This question is the focus of a national debate as the country strives to find a system that provides a good standard of living for workers while allowing U.S. businesses to succeed at home and compete abroad. In this book, David Levine uses case studies and extensive evidence to show that greater employee involvement in the workplace can significantly increase both productivity and worker satisfaction. Employee involvement has many labels, including high-performance workplaces, continuous improvement, or total quality management. The strongest underlying theme is that frontline employees who are actually performing the work will always have insights about how to improve their tasks. Employee involvement includes a range of policies that, at the minimal end, permit workers to suggest improvement, and at the substantive end, create an integrated strategy to give all employees the ability, motivation, and authority to constantly improve the organizations operations. Despite the evidence of its benefits, substantive employee involvement remains the exception in the U.S. work force. Levine explores the obstacles to its spread, which include legal barriers, capital markets that discourage investment in people, organizational inertia, and the costs of implementation. Levine concludes with specific public policy recommendations for increasing the extent of employee involvement, including changes in government regulation of capital and labor markets to encourage long-term investment and labor-management cooperation. He recommends macroeconomic policies to sustain high employment, less regulation for high-involvement workplaces, and trainingin schools and on the job to teach high-involvement practices. He also suggests new roles for unions and provides a checklist for employers to assess their progress in implementing employee involvement. David I. Levine was on the staff of President Clintons Council of Economic Advisers and an associate professor in the Haas School of Business at the University of California, Berkeley. Selected as a Noteworthy Book in Industrial Relations and Labor Economics by the Firestone Library, Princeton University

Family Structure and Youths' Outcomes: Which Correlations are Causal?

Growing up in a family that lacks a biological father is correlated with a number of poor outcomes for youths. This study uses the National Educational Longitudinal Survey of 1988 (NELS) to examine the extent to which the apparent effects of divorce or remarriage are not causal, but are due to pre-existing problems or advantages of the family or youth. We find that the correlations between family structure and youth outcomes are causal: neither divorce nor remarriage appear to be related to pre-existing characteristics of the youth or family. Finally, unlike some previous research, we do not find gender differences in the effects of the presence of a father or stepfather.

The Schooling Costs of Teenage Out-of-Wedlock Childbearing: Analysis with a Within-School Propensity-Score-Matching Estimator

Teen out-of-wedlock mothers have lower education and earnings than do peers who have children later. This study uses the National Educational Longitudinal Survey of 1988 to examine the extent to which the apparent effects of out-of-wedlock teen childbearing are due to preexisting disadvantages of the young women and their families. We use a novel method that matches teen mothers to similar young women in their junior high school (that is, prior to pregnancy). We find that out-of-wedlock fertility reduces education substantially, although far less than the cross-sectional comparisons of means suggest. We further find that this effect is larger among those with lower probabilities of having a child out of wedlock.

Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers

Several studies have examined how the ISO 9001 quality management systems standard predicts changes in organizational outcomes such as profits. This is the first large-scale study to explore how employee outcomes such as employment, earnings, and health and safety change when employers adopt ISO 9001. We analyzed a matched sample of nearly 1,000 companies in California. ISO 9001 adopters subsequently had far lower organizational death rates than a matched control group of nonadopters. Among surviving employers, ISO adopters had higher growth rates for sales, employment, payroll, and average annual earnings. Injury rates declined slightly for ISO 9001 adopters, although total injury costs did not. These results have implications for organizational theory, managers, and public policy.

Do microfinance programs help families insure consumption against illness

Families in developing countries face enormous financial risks from major illness both in terms of the cost of medical care and the loss in income associated with reduced labor supply and productivity. We test whether access to microfinancial savings and lending institutions helps Indonesian families smooth consumption after declines in adult health. In general, results support the importance of these institutions in helping families to self-insure consumption against health shocks.

Ergonomics, employee involvement, and the Toyota production system: A case study of NUMMI's 1993 model introduction

New United Motors Manufacturing, Inc. (NUMMI) is a GM-Toyota joint venture that has been lauded by some for achieving performance based on high employee involvement, and criticized by others for intensifying work and harming workers. In 1993, OSHA cited NUMMI for paying insufficient attention to ergonomic issues during the introduction of a new car model. The authors analyze the origins of NUMMIs ergonomic problems and the responses of the company, union, and regulators. They also discuss a more ergonomically successful model introduction two years later. This case suggests that although employee involvement does not eliminate all divergence of interests between management and workers, it can change the terms of that divergence. When management reliance on employee involvement is complemented by strong employee voice and strong regulators, managers may find it in their interest to improve safety as a means of maintaining high employee commitment and thereby improving business performance.

Intention and Stochastic Outcomes: An Experimental Study

Do people care about intentions - even when good intentions do not produce good results? In our experiments we find that rates of punishment and reward react strongly to intentions (the wage a firm decides to pay) and more modestly to distributional outcomes (the higher or lower wage actually received including the stochastic component). For example, workers who end up receiving medium wages respond much more positively when this resulted from the firm offering a high wage but bad luck lowered the workers pay than when this resulted from the firm offering a low wage and good luck raised the pay. Copyright 2007 The Author(s). Journal compilation Royal Economic Society 2007.