Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department
Business
Program Name/Specialization
Accounting
Faculty/School
Lazaridis School of Business and Economics
First Advisor
Leslie Berger
Advisor Role
Associate Professor
Second Advisor
Lan Guo
Advisor Role
Associate Professor
Abstract
To quickly reduce costs in response to external shocks, firms often implement voluntary furloughs. In a voluntary furlough, employees decide whether to accept a reduction in their pay with a corresponding reduction in work hours. Despite the prevalence of voluntary furloughs in practice, it remains an empirical question how employees will respond to this cost reduction practice. The purpose of my dissertation is to investigate how the implementation of a voluntary furlough affects the subsequent effort of employees who volunteer and those who do not volunteer for a furlough.
I address my research question using two experiments where I manipulate the type of furlough implemented (voluntary, mandatory, or no furlough) and, within the voluntary furlough condition, I measure employees’ decision to volunteer or not volunteer and the motive underlying this decision. Consistent with my expectations, I observe that the effect of a voluntary furlough on employees’ subsequent effort depends on their motives for volunteering. Employees who have altruistic motives for volunteering do not change their effort significantly following the furlough period, but employees who do not have altruistic motives for volunteering (i.e., have only egoistic motives) significantly increase their effort following the furlough period. I also observe, consistent with my expectations, that employees who choose not to volunteer increase their subsequent effort.
My dissertation contributes to the literature that investigates the consequences of labour cost reduction in the workplace. In contrast to the prior research, which has studied the effects of mandatory reduction strategies, my research provides insights into how employees respond to a voluntary furlough. I provide initial evidence that employees’ reactions to a voluntary furlough depend on their decision to volunteer or not volunteer, as well as the motives underlying this decision.
Recommended Citation
Matthews, Kelsey, "Investigating the Use of Voluntary Furloughs to Reduce Labour Costs: The Effect on Employee Effort" (2024). Theses and Dissertations (Comprehensive). 2646.
https://scholars.wlu.ca/etd/2646
Convocation Year
2024
Convocation Season
Spring