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Modularizing a system, a product, or a process can have positive effects on performance in many instances. That it may have adverse consequences has also been discussed, although on balance the literature seems inclined to consider that modularity is desirable in most cases. In this paper, we put forward a feature of modular systems that extant research has not considered in spite of its strong performance-hindering potential. Starting from the premise that organizations are essentially patterns of formal and informal interactions, and modules within organizations are places where these interactions accumulate and reinforce, we argue that modularity can exacerbate issues related to (low-)performance spillovers from one organizational actor to another. With psychosocial affect as the channel connecting the formal and the informal spheres, we develop a simple model that combines elements of psychology research, network science, and organization theory to study how formal and informal elements jointly determine organizational performance under different modularity configurations. We find that organizational performance is lower when the alignment of formal and informal is stronger: informal interaction augments local accumulation of stress caused by formal aspects of firm organization. However, this result depends heavily on the modularity of formal organization: feedbacks between formal and informal elements cause much harsher performance degradation in modular systems. This suggests the exercise of caution when considering the possibility to modularize a production system.

We conduct experiments on an online platform to investigate the causal effect of gender discrimination on labor supply decisions. Controlling for the piece-rate wage, workers who face negative gender-discriminatory wage inequality supply substantially less labor compared to workers who face gender-neutral wage inequality (−0.16 standard deviations) and compared to workers with equal wages (−0.21 standard deviations). We also examine the effect of positive discrimination, differences between men and women, and the role of beliefs about facing discrimination. Our results provide evidence for decreased labor supply in reaction to discrimination being a novel mechanism contributing to the gender gap in earnings.

Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Using an online labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on labor supply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, or unfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, the source of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supply compared to the case of equal low wages (−22%). This decrease is twice as large as those induced by low wages due to fair chances or unfair chances coming from an unspecified source. In addition, exploratory analysis suggests that in response to unequal pay, low-wage male workers reduce labor supply irrespective of the source of inequality, whereas low-wage female workers reduce labor supply only if unequal pay is due to gender-discriminatory chances. Our results concerning gender discrimination indicate a new reason for the lower labor supply of women, which is a prominent explanation for the gender gap in earnings.

Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Using an online labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on labor supply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, or unfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, the source of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supply compared to the case of equal low wages (-22%). This decrease is twice as large as those induced by low wages due to fair chances or unfair chances coming from an unspecified source. An additional experiment confirms the deleterious effect of gender discrimination on labor supply in a work environment devoid of chances, and highlights that workers' beliefs about facing discrimination matter for their responses. Our results concerning gender discrimination indicate a new reason for the lower labor supply of women, which is a prominent explanation for the gender gap in earnings.

Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Usingan online labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on labor supply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, or unfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, the source of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supply compared to the case of equal low wages (–22%). This decrease is twice as large as those induced by low wages due to fair chances or unfairchances coming from an unspecified source. In addition, exploratory analysis suggests that in response to unequal pay, low-wage male workers reduce labor supply irrespectiveof the source of inequality, whereas low-wage female workers reduce labor supply only if unequal pay is due to gender-discriminatory chances. Our results concerning genderdiscrimination indicate a new reason for the lower labor supply of women, which is a prominent explanation for the gender gap in earnings.

Labor market opportunities and wages may be unfair for various reasons, and how workers respond to different types of unfairness can have major economic consequences. Using anonline labor platform, where workers engage in an individual task for a piece-rate wage, we investigate the causal effect of neutral and gender-discriminatory unfair chances on laborsupply. We randomize workers into treatments where we control relative pay and chances to receive a low or a high wage. Chances can be fair, unfair based on an unspecified source, orunfair based on gender discrimination. Unequal pay reduces labor supply of low-wage workers, irrespective of whether the low wage is the result of fair or unfair chances. Importantly, thesource of unfair chances matters. When a low wage is the result of gender-discriminatory chances, workers matched with a high-wage worker substantially reduce their labor supplycompared to the case of equal low wages (-22%). This decrease is twice as large as those induced by low wages due to fair chances or unfair chances coming from an unspecified source.In addition, exploratory analysis suggests that in response to unequal pay, low-wage male workers reduce labor supply irrespective of the source of inequality, whereas low-wage femaleworkers reduce labor supply only if unequal pay is due to gender-discriminatory chances. Our results concerning gender discrimination indicate a new reason for the lower labor supply ofwomen, which is a prominent explanation for the gender gap in earnings.

We find that in market-partners, market experience has adverse effects on the efficiency of cooperation on both market-winner and market-loser pairs. In market-strangers, pairs of market-winners manage to cooperate more efficiently. These results indicate that it is not market experience per se that lowers the ability to cooperate. Rather, having competed for scarce resources on the same side of the market makes it difficult to overcome the social dilemma and positive market experience fosters cooperation only for those who did not have to compete with each other. We also show that differences in cooperation cannot be explained by ex-ante income differences and find that market experience also affects subjective well-being and social value orientation.