Work Life Balance

Work-Life Balance, Management Practices and Productivity

Nick Bloom1 , Tobias Kretschmer2 and John Van Reenen3

April 2006

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Dept. Economics, Stanford & Centre for Economic Performance, London School of Economics Dept. Management & Centre for Economic Performance, London School of Economics 3 Dept. Economics & Centre for Economic Performance, London School of Economics

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Abstract: Many critics of free-market liberalism argue that higher product-market competition and the “Anglo-Saxon” management practices it stimulates increases productivity only at the expense of employees’ work-life balance (WLB). The empirical basis of these claims is unclear. To address this issue we use an innovative survey tool to collect the first international data on management practices and work-life balance practices, surveying 732 medium sized manufacturing firms in the US, France, Germany and the UK. We find that WLB outcomes are significantly associated with better management, so that well run firms are both more productive and better for their employees. After controlling for management practices, however, we find no additional relationship between WLB and productivity. WLB practices are also not reduced by tougher competition, suggesting no deleterious effect of competition on employees’ working environment. Finally, looking at multinationals we find that US subsidiaries in Europe adopt the superior management practices of their US parent firms but the local WLB practices of their European competitors. JEL Code: O32, O33, L31 Keywords: Work-life balance, family-friendly work practices, management practices, productivity, competition. Contact details: nbloom@stanford.edu; t.kretschmer@lse.ac.uk; j.vanreenen@lse.ac.uk Acknowledgements: We would like to thank the Anglo-German Foundation for their generous financial support.

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I. INTRODUCTION

Does good management and higher productivity come at the expense of work-life balance (WLB), or is good work-life balance an...