Skills, preferences and rights: evolutionary complementarities in labor organization

In this paper, we model the interaction between types of workers and organizations through evolutionary game theory. In particular, we compare two paradigms of work organization: in the “hierarchical” regime, it is the organization itself that makes all relevant decisions, leaving little autonomy to its employees. Conversely, modern “networks” empower their workforce with the right to take initiatives, modulate routines and use their general knowledge in an instrumental way. In our framework, the choice to decentralize decisions is driven by the interplay between three elements: the complexity of production, the employees’ work preferences and skills and the labor-discipline implications of different organizational modes. By analyzing a series of match-specific effects, we derive parametrizations for which centralization dominates delegation and vice-versa. Explicit conditions under which the system remains stuck in Pareto-inferior situations are also obtained. Finally, we interpret our results to draw comments on the current contraction of job-discretion in OECD countries.