Leeway for the Loyal

This paper examines the factors underlying task discretion from an economist’s perspective. It argues that the key axis for understanding discretion is the trade-off between the positive effects of discretion on potential output per employee and the negative effects of greater leeway on work effort. In empirical analysis using matched employer-employee data it is shown that discretion is strongly affected by the level of employee commitment. In addition discretion is generally greater in highskilled jobs, though not without exceptions, and lower where employees are underskilled. Homeworking and flexitime policies raise employee discretion, while the impact of teamworking is mixed, being negative in about half of cases, neutral or positive for the rest. There are also significant and substantial unobserved establishment-level factors which affect task discretion.