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This article uses representative employee survey data for Finland from 2003 to study the incidence of adaptive teams, incentive pay and employer-provided training. A combination of these practices would be termed a high-performance work system (HPWS). Influential theories suggest that we should view these practices as `bundled' together. However, these `bundles' are quite rare and thus HPWS is a rare phenomenon. The article finds that the probability of participation in HPWS is higher for (1) employees with higher socioeconomic status, (2) employees using communication technology for internal communication in the workplace, (3) younger employees, (4) full-time and permanent employees, (5) employees in larger firms and (6) employees in foreign-owned firms.

AbstractThere was a strong push from employers to decentralize wage setting in Finland in the early 2000s. We analyze the incidence of decentralization and its effect on the level and dispersion of wages by using nationally representative panel data. The results show that wage setting was more likely decentralized in collective agreements where a high share of employees worked in manufacturing or real estate industries than in other industries, such as in education and human health and social work activities. Decentralization was, for the most part, quite short-lived. Using recent difference-in-differences methods that allow for heterogeneous treatment effects and differences in the timing of treatment, we show that decentralization had modest positive effects on the level and dispersion of wages in manufacturing.

AbstractStandard models of promotion tournaments do not distinguish between wages and bonuses and thus cannot explain variation in the use of bonuses. We combine classic and market-based tournament theories to develop a model in which wages and bonuses serve distinctly different roles. We use this model to derive testable predictions which we test employing both a single firm data set and a data set encompassing a large segment of the Finnish economy. Our empirical analysis supports the testable predictions and shows that our theoretical approach better matches the data than alternative theories of bonus determination based on arguments already in the literature.

AbstractUsing linked employer‐employee data for Finland we examine associations between job design, employee well‐being and job‐related stress. Three key findings stand out. First, in accordance with the theory of Karasek and Karasek and Theorell, job control and supervisory support are positively correlated with employee well‐being and negatively correlated with job‐related stress. Second, as predicted by theory, job demands are positively correlated with job‐related stress. Third, there is no association between job demands and employee well‐being and, contrary to expectations, neither job control nor supervisory support alleviate the negative relationship between job demands and job‐related stress. Our results confirm the importance of job design for employee well‐being.