Working Together to Work Less: Ability Homogeneity and Output Restriction in Teams

Abstract

Teams of similarly skilled workers are usually found to be more productive, because members can observe one another and shirking is easy to detect. We show the same visibility can sustain the opposite behavior when producing more today makes tomorrow's job harder. We study a Chinese manufacturer where workers compete for bonuses inside fixed work groups, and where exceeding your personal production quota by more than 8% for two consecutive months gets the quota permanently raised. Holding back is therefore individually rational — the classic ratchet effect — but only if colleagues hold back too; otherwise you simply lose the internal competition. Restriction is thus a coordination problem, and we ask which groups solve it. Using seven years of personnel records, we find that restraint emerges only where members are both highly skilled and similar to one another. In those groups, 43% of worker-months land in the narrow window between meeting the quota and triggering an increase, against 19–25% elsewhere, and output clusters tightly around the quota. Equally skilled but internally dissimilar groups behave like unskilled ones, ruling out capability as the explanation. The same worker restricts more once reassigned into a similar-skill group, and restricting workers put in no fewer hours. Skill homogeneity is neither inherently good nor bad for productivity: it amplifies whatever the incentive scheme rewards.