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Personell Economics: assignment lecture 7
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Assignment about the employment relationship for lecture 7 from Personell Economics
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Personnel Economics2020-2021
Assignment Lecture 7
Student: Student number:
Date: 05-01-2020
Word count: 1237
, Assignment Lecture 7 on Personnel Economics 2020-2021
Assignment about the employment relationship
a. How important is trust in the workplace according to Helliwell and Huang?
In their research, Helliwell and Huang (2010) use workplace trust as a proxy for social capital.
Previous literature on social capital has shown that high levels of workplace trust are positively related
to measures of social capital (Halpern, 2005; Putnam, 2000). Furthermore, workplace trust has a
positive effect on well-being. Therefore, trust in the workplace is very important. According to
Helliwell and Huang (2010), it is even the strongest predictor of job satisfaction. For example, “a
move from the 75th percentile to the top level of workplace trust has a compensating differential
equivalent to a 48% increase in household income” (Helliwell & Huang, 2010, p.221). In addition, as
people spend a large part of their life in the workplace, Helliwell and Huang expect workplace trust to
be strongly linked to life satisfaction as well. The effects of workplace trust on life satisfaction are so
large that the authors suggest that trust is either very costly to build and maintain, or that there are
unexploited gains available for trust-building activities. To conclude, Helliwell and Huang (2010)
highlight that providing better jobs, including non-financial job characteristics like workplace trust,
generates multiple benefits like decreased turnover, monitoring and hiring costs. Therefore, trust in the
workplace is very important.
Is there a gender difference?
According to Helliwell and Huang (2010), a gender difference indeed exists. First, women value trust
in management more than men. Second, heterogeneity is shown as women attach less value to income
as an incentive compared to men. Therefore, on average, women are more likely to be employed in
firms where wages are lower and trust in management is higher.
How do these findings relate to those of Cassar and Meier?
The findings of Helliwell and Huang (2010) relate to the findings of Cassar and Meier (2018) as they
explain the importance of nonmonetary incentives. In their article, Cassar and Meier highlight that
employees are not solely motivated by wages. Job design can increase the meaningfulness of work as
it affects the three psychological needs of autonomy, competence, and relatedness. These findings
relate to the findings of Helliwell and Huang, as they also explain that employees are not only
motivated by wages, but by nonmonetary job aspects like trust as well.
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