Publications

2018
Bryson A, Freeman RB. The Role of Employee Stock Purchase Plans - Gift and Incentive? Evidence from a Multinational Corporation. BJIR [Internet]. 2018 :1-21. Publisher's VersionAbstract

Employee share purchase plans (ESPPs) give free or discounted shares of stock to workers who buy shares in the hope that the greater share ownership will retain workers, build loyalty and raise productivity, as in gift exchange models.  Using measures of workers' organisational loyalty and sense of ownership in a multinational firm that puts ESPP at the heart of its compensation policy, we find that workers who join the ESPP have lower turnover intentions and do less on-the-job search than others, motivated in part by gift exchange reciprocity, and also respond to the group incentive of ownership with greater work effort, longer hours, and lower absence rates.  Workers in workplaces with high perceived rates of ESPP participation are more likely to intervene against shirkers. The results appear robust to the selectivity of who joins the ESPP.  The mix of gifting shares to workers who buy shares and the group incentive of ownership makes ESPPs a unique dual form of compensation.

role_of_employee_stock_purchase_plans_gift_or_incentive_final-ms_w-bryson_may2018.pdf
2017
Bryson A, Freeman R, Gomez R, Willman P. “The Twin Track Model of Employee Voice: An Anglo-American Perspective on Union Decline and the Rise of Alternative Forms of Voice,” Alex Bryson, Richard Freeman, Rafael Gomez, Paul Willman,IZA DP 11223, December 2017. [Internet]. 2017. Publisher's VersionAbstract

We present a simple framework for analyzing decline in union voice in the Anglo-American world and its replacement by non-union, often direct, forms of worker voice. We argue that it is a decline in the in-flow to unionisation among employers and workers, rather than an increase in the outflow rate, that accounts for this decline.  We show how union decline is predicted by experience good and cost-disease models of trade unionism and is linked to specific institutional and policy constraints on union organizing in the Anglo-American world. We show how the co-existence of union and non-union forms of worker voice is predicted by transaction cost economics, while the growth in non-union forms of worker voice is aided by declining costs of employers “making” voice mechanisms. We draw on “spurt” theories of unionisation to help understand factors underpinning union decline, including falling costs of employer opposition to unionisation as density falls, as discuss possibilities for “bottom-up” growth in union-like forms of worker voice implied by “spurt” theories.

twin_track_model_of_employee_voice_ms-for-iza_dp_14dec2017.pdf
Freeman R, Liang W, Song R, Timmins C. “Willingness to Pay for Clean Air in China,” NBER Working Paper NO. 24157. [Internet]. 2017. Publisher's VersionAbstract
We develop a residential sorting model incorporating migration disutility to recover the implicit value of clean air in China. The model is estimated using China Population Census Data along with PM2.5 satellite data. Our study provides new evidence on the willingness to pay for air quality improvement in developing countries and is the first application of an equilibrium sorting model to the valuation of non-market amenities in China. We employ two novel instrumental variables based on coal-fired electricity generation and wind direction to address the endogeneity of local air pollution. Results suggest important differences between the residential sorting model and a conventional hedonic model, highlighting the role of moving costs and the discreteness of the choice set. Our sorting results indicate that the economic value of air quality improvement associated with a one-unit decline in PM2.5 concentration is up to $8.83 billion for all Chinese households in 2005.
willngess_to_pay_for_clean_air_in_china_ms-for-dash_freeman-laing-song-timmins_dec2017.pdf
Barth E, Davis JC, Freeman RB, Wang AJ. The Effects of Scientists and Engineers on Productivity and Earnings at the Establishment Where They Work. [Internet]. 2017. Publisher's VersionAbstract

This paper uses linked establishment-firm-employee data to examine the relationship between the scientists and engineers proportion (SEP) of employment, and productivity and labor earnings. We show that: (1) most scientists and engineers in industry are employed in establishments producing goods or services, and do not perform research and development (R&D); (2) productivity is higher in manufacturing establishments with higher SEP, and increases with increases in SEP; (3) employee earnings are higher in manufacturing establishments with higher SEP, and increase substantially for employees who move to establishments with higher SEP, but only modestly for employees within an establishment when SEP increases in the establishment. The results suggest that the work of scientists and engineers in goods and services producing establishments is an important pathway for increasing productivity and earnings, separate and distinct from the work of scientists and engineers who perform R&D.

Doucouliagos H, Freeman RB, Laroche P. The Economics of Trade Unions: A Study of a Research Field and Its Findings. Routledge; 2017 pp. 190. Publisher's VersionAbstract

Richard B. Freeman and James L. Medoff’s now classic 1984 book What Do Unions Do? stimulated an enormous theoretical and empirical literature on the economicimpact of trade unions. Trade unions continue to be a significant feature of many labormarkets, particularly in developing countries, and issues of labor market regulationsand labor institutions remain critically important to researchers and policy makers.

The relations between unions and management can range between cooperation and conflict; unions have powerful offsetting wage and non-wage effects that economists and other social scientists have long debated. Do the benefits of unionism exceed the costs to the economy and society writ large, or do the costs exceed the benefits? The Economics of Trade Unions offers the first comprehensive review, analysis and evaluation of the empirical literature on the microeconomic effects of trade unions using the tools of meta-regression analysis to identify and quantify the economic impact of trade unions, as well as to correct research design faults, the effects of selection bias and model misspecification.

This volume makes use of a unique dataset of hundreds of empirical studies and their reported estimates of the microeconomic impact of trade unions. Written by three authors who have been at the forefront of this research field (including the co-author of the original volume, What Do Unions Do?), this book offers an overview of a subject that is of huge importance to scholars of labor economics, industrial and employee relations, and human resource management, as well as those with an interest in meta-analysis.

Blasi J, Kruse D, Freeman R. “Having a Stake: Evidence and Implications for Broad-based Employee Stock Ownership and Profit Sharing,”. Third Way | Economy [Internet]. 2017;(February ). Publisher's Version having_a_stake_broad-based_esop_and_profit-sharing_third-way_feb2017.pdf
Barth E, Davis J, Freeman RB, Kerr SP. Weathering the Great Recession: Variation in Employment Responses by Establishments and Countries. The Russell Sage Foundation Journal of the Social Sciences [Internet]. 2017;3 (3) :50-69. Publisher's VersionAbstract

This paper finds that U.S. employment changed differently relative to output in the Great Recession and recovery than in most other advanced countries or in the United States in earlier recessions. Instead of hoarding labor, U.S. firms reduced employment proportionately more than output in the Great Recession, with establishments that survived the downturn contracting jobs massively. Diverging from the aggregate pattern, U.S. manufacturers reduced employment less than output while the elasticity of employment to gross output varied widely among establishments. In the recovery, growth of employment was dominated by job creation in new establishments. The variegated responses of employment to output challenges extant models of how enterprises adjust employment over the business cycle.

 

 

weathering-great-recession_submit-wp-3_7-20-16_barth-davis-freeman-kerr_sage.pdf weathering_the_great_recession_rsf-2017v3issue3_may2017.pdf
2016
Bryson A, Clark AE, Freeman RB, Green CP. “Shared Capitalism and Worker Wellbeing”. Labour Economics [Internet]. 2016;42 (October) :151-58. Publisher's VersionAbstract

We show that worker wellbeing is determined not only by the amount of compensation workers receive but also by how compensation is determined. While previous theoretical and empirical work has often been preoccupied with individual performance-related pay, we find that the receipt of a range of group-performance schemes (profit shares, group bonuses and share ownership) is associated with higher job satisfaction. This holds conditional on wage levels, so that pay methods are associated with greater job satisfaction in addition to that coming from higher wages. We use a variety of methods to control for unobserved individual and job-specific characteristics. We suggest that half of the share-capitalism effect is accounted for by employees reciprocating for the “gift”; we also show that share capitalism helps dampen the negative wellbeing effects of what we typically think of as “bad” aspects of job quality.

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Bryson A, Freeman RB. Profit Sharing Boosts Employee Productivity and Satisfaction. [Internet]. 2016. Publisher's Version shared_capitalism_-_what_is_it_and_what_does_it_do_final-ms_hbr-dec2016.pdf
Tong Z, Chen Y, Malkawi A, Liu Z, Freeman RB. “Energy Saving Potential of Natural Ventilation in China: The Impact of Ambient Air Pollution,”. Applied Energy 179 [Internet]. 2016;179 :660-668. Publisher's VersionAbstract

Natural ventilation (NV) is a key sustainable solution for reducing the energy use in buildings, improving thermal comfort, and maintaining a healthy indoor environment. However, the energy savings and environmental benefits are affected greatly by ambient air pollution in China.  Here we estimate the NV potential of all major Chinese cities based on weather, ambient air quality, building configuration, and newly constructed square footage of office buildings in the year of 2015. In general, little NV potential is observed in northern China during the winter and southern China during the summer. Kunming located in the Southwest China is the most weather-favorable city for natural ventilation, and reveals almost zero loss due to air pollution. Building Energy Simulation (BES) is conducted to estimate the energy savings of natural ventilation in which ambient air pollution and total square footage must be taken into account. Beijing, the capital city, displays limited per-square-meter saving potential due to the unfavorable weather and air quality for natural ventilation, but its largest total square footage of office buildings makes it become the city with the greatest energy saving opportunity in China. Our analysis shows that the aggregated energy savings potential of office buildings at 35 major Chinese cities is 112 GWh in 2015, even after allowing for a 43 GWh loss due to China’s serious air pollution issue especially in North China. 8–78% of the cooling energy consumption can be potentially reduced by natural ventilation depending on local weather and air quality. The findings here provide guidelines for improving current energy and environmental policies in China, and a direction for reforming building codes.

energy_saving_potential_of_natural_ventilation_in_china_ms-almost-final_tong-chen-malkawi-liu-freeman_applied_energy_2016_1.pdf
Blasi JR, Freeman RB, Kruse DL. “Evidence: What the U.S. Research Shows about Worker Ownership,”. In: Oxford Handbook of Mutual, Co-operative and Co-Owned Business. London: UK: Oxford University Press ; 2016. evidence_what_the_research_shows_ms-final_blasi-freemann-kruse_oup-hdbk_2016.doc
Freeman RB. Who Owns the Robots Rules the World: The deeper threat of robotization. Harvard Magazine. 2016.
Freeman RB, Han E, Duke B, Madland D. “How Does Declining Unionism Affect the American Middle Class and Inter-generational Mobility?”. Federal Reserve Bank, 2015 Community Development Research Conference Publication. 2016. how_does_declining_unionism_affect_mobilty_final-ms_fed-reserve_freeman-han-madland-duke_1-25-16.pdf
Blasi J, Freeman R, Kruse D. “Do Broad-based Employee Ownership, Profit Sharing, and Stock Options Help the Best Firms Do Even Better?”. British Journal of Industrial Relations [Internet]. 2016;54 (1) :55-82. Publisher's VersionAbstract
This paper analyzes the linkages among group incentive methods of compensation
(broad-based employee ownership, profit sharing, and stock options), labor practices, worker
assessments of workplace culture, turnover, and firm performance in firms that applied to the
“100 Best Companies to Work For in America” competition from 2005 to 2007. Although
employers with good labor practices self-select into the 100 Best Companies firms sample,
which should bias the analysis against finding strong associations among modes of
compensation, labor policies, and outcomes, we find that employees in the firms that use group
incentive pay more extensively participate more in decisions, have greater information sharing,
trust supervisors more, and report a more positive workplace culture than in other companies.
The combination of group incentive pay with policies that empower employees and create a
positive workplace culture reduces voluntary turnover and increases employee intent to stay and
raises return on equity.
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do_broad-based_ee-profit-sharing-so_help_best_firms_do_even_better_bjir-final-ms_5-10-15.pdf
Barth E, Bryson A, Davis JC, Freeman RB. It’s Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States. Journal of Labor Economics, Special Issue dedicated to Edward Lazear [Internet]. 2016;34 (S2) :S67-S97. Publisher's VersionAbstract

This paper analyzes the role of establishments in the upward trend in dispersion of earnings that has become a central topic in economic analysis and policy debate. It decomposes changes in the variance of log earnings among individuals into the part due to changes in earnings among establishments and the part due to changes in earnings within establishments. The main finding is that much of the 1970s–2010s increase in earnings inequality results from increased dispersion of the earnings among the establishments where individuals work. Our results direct attention to the role of establishment-level pay setting and economic adjustments in earnings inequality.

wp_20447_-_its_where_you_work_2015.pdf
2015
Voos PB, Freeman RB. “Standards for Evaluating the Impact of ‘Right to Work’ Laws,” Policy Brief provided to the West Virginia Legislature. Paula B. Voos and Richard B. Freeman, April 2015.; 2015. standards_for_evaluating_the_impact_of_right_to_work_laws_paula-voos_rbf_3april2015.pdf
Freeman R, Han E, Madland D, Duke BV. “How Does Declining Unionism Affect the American Middle Class and Intergenerational Mobility?” NBER Working Paper No. 21638 (October 2015). [Internet]. 2015. Publisher's VersionAbstract
This paper examines unionism’s relationship to the size of the middle class and its relationship to intergenerational mobility. We use the PSID 1985 and 2011 files to examine the change in the share of workers in a middle-income group (defined by persons having incomes within 50% of the median) and use a shift-share decomposition to explore how the decline of unionism contributes to the shrinking middle class. We also use the files to investigate the correlation between parents’ union status and the incomes of their children. Additionally, we use federal income tax data to examine the geographical correlation between union density and intergenerational mobility. We find: 1) union workers are disproportionately in the middle-income group or above, and some reach middle-income status due to the union wage premium; 2) the offspring of union parents have higher incomes than the offspring of otherwise comparable non-union parents, especially when the parents are low-skilled; 3) offspring from communities with higher union density have higher average incomes relative to their parents compared to offspring from communities with lower union density. These findings show a strong, though not necessarily causal, link between unions, the middle class, and intergenerational mobility.
Freeman RB, Huang W. “China’s ‘Great Leap Forward’ in Science and Engineering,” with Wei Huang. In Aldo Geuna (editor), Global Mobility of Research Scientists: The Economics of Who Goes Where and Why (Elsevier, 2015). NBER Working Paper #21081 (April 2015). In: Global Mobility of Research Scientists: The Economics of Who Goes Where and Why . Elsevier ; 2015. Publisher's Version china_great_leap_forward_in_s-and-e_rbf-wei-huang_updated_ms-for-vol_geuna_vol_5-15-15.pdf
Freeman RB, Li X. “How Does China’s New Labor Contract Law Affect Floating Workers?” with Xiaoying Li, British Journal of Industrial Relations 53:4 (December 2015) pp 711-735. BJIR [Internet]. 2015;53 (4) :711-735. Publisher's VersionAbstract

China’s new Labor Contract Law took effect on January 2008 and required firms to give migrant workers written contracts, strengthened labor protections for workers and contained penalties for firms that did not follow the labor code. This paper uses survey data of migrant workers in the Pearl River Delta before and after the law and a retrospective question on when workers received their first labor contract to assess the effects of the law on labor outcomes. The evidence shows that the new law increased the percentage of migrant workers with written contracts, which in turn raised social insurance coverage, reduced the likelihood of wage arrears, and raised the likelihood that the worker had a union at their workplace.

how_does_china_new_labor_contract_law_affect_floating_workers_submit-wp_freemanxiaoying_li_7-15-13.pdf
Blasi JR, Freeman RB, Kruse DL. "Capitalism for the Rest of Us,"New York Times Op-Ed, July 17, 2015. Kruse, New York Times Op-Ed, July 17, 2015. "Capitalism for the Rest of Us," Joseph R. Blasi, Richard B. Freeman, and Douglas L. Kruse, New York Times Op-Ed, July 17, 2015. . New York Times [Internet]. 2015. Publisher's Version

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