Remuneration Mechanisms Research Articles

Refugee Hiring and Organizational Performance

Prior research on the performance effects of hiring immigrants has mainly considered people who choose to move to other countries. We shift attention to forced migrants (i.e., refugees) and study the relationship between their employment and firm performance. We focus on the specific labor market conditions that refugees face and theorize that performance improves among firms that hire refugees. We explain this relationship using two interconnected mechanisms that revolve around refugees’ limited outside options. First, as refugees have strong incentives to remain employed, they put extensive effort into their jobs, work long hours, and, thereby, reduce the employer’s labor costs related to worker turnover (effort mechanism). Second, as refugees are generally willing to accept low pay, hiring them reduces the employer’s labor costs related to salaries (remuneration mechanism). Moreover, we theorize that greater job insecurity at the hiring firm strengthens both mechanisms because it increases refugees’ perceived risk of being fired and their fear of being unemployed. We find support for our theoretical predictions in a matched sample of 27,782 firms in Denmark covering the period from 2001 to 2016. History: This paper has been accepted for the Organization Science Special Issue on Migration and Organization. Funding: V. Rocha received financial support from the Carlsberg Foundation [Grant CF21-0156]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2021.15980 .

Time-Based Stress and Procedural Justice: Can Transparency Mitigate the Effects of Algorithmic Compensation in Gig Work?

The gig economy has led to a new management style, using algorithms to automate managerial decisions. Algorithmic management has aroused the interest of researchers, particularly regarding the prevalence of precarious working conditions and the health issues related to gig work. Despite algorithmically driven remuneration mechanisms' influence on work conditions, few studies have focused on the compensation dimension of algorithmic management. We investigate the effects of algorithmic compensation on gig workers in relation to perceptions of procedural justice and time-based stress, two important predictors of work-related health problems. Also, this study examines the moderating effect of algorithmic transparency in these relationships. Survey data were collected from 962 gig workers via a research panel. The results of hierarchical multiple regression analysis show that the degree of exposure to algorithmic compensation is positively related to time-based stress. However, contrary to our expectations, algorithmic compensation is also positively associated with procedural justice perceptions and our results indicate that this relation is enhanced at higher levels of perceived algorithmic transparency. Furthermore, transparency does not play a role in the relationship between algorithmic compensation and time-based stress. These findings suggest that perceived algorithmic transparency makes algorithmic compensation even fairer but does not appear to make it less stressful.

Reliability options: Regulatory recommendations for the next generation of capacity remuneration mechanisms

The policy and regulatory debate raised after the 2022 energy crisis has reaffirmed capacity remuneration mechanisms (CRMs) as a key element of the electricity market design required to drive the much-needed energy transition. Reliability options are a CRM product that effectively addresses the market failures impacting security of supply, while minimising the interference with the different segments of the energy market. This article provides a comprehensive and detailed assessment of the design elements of reliability options and advances recommendations that can be useful for regulators who may consider introducing this scheme in their electricity markets. The analysis benefits from lessons learned in those power sectors where reliability options have been implemented (Colombia, ISO New England, Ireland, Italy, and Belgium). This allows to narrow the gap between the theoretical debate and the real-world implementation of these mechanisms.

Real-time capacity cost obligations design in high-renewables energy markets

Under high renewable penetration, the declining energy prices cannot reflect capacity costs of generators. To deal with the missing money problem, several markets around the world have introduced capacity remuneration mechanisms. These mechanisms act well for the generation side by compensating investment costs, but the cost allocation methods among the demand side are non-differentiated or lagging, thus failing to effectively guide consumption patterns. This research proposes a novel two-step cost allocation framework to formulate real-time cost obligations. In replacement of load levels, net load levels (load minus renewable output) are used to measure adequacy conditions under high renewable penetration. The capacity costs are pre-allocated by Shapley value to obtain a mapping function from net load levels to cost obligations. In the real-time, the mapping function is incorporated into the spot market clearing model to generate obligations endogenously. Numerical analyses are conducted on the IEEE test system and an empirical case with California real data. Compared with the lagging obligations formulated by the current mechanism, the proposed framework can reduce peak net load by incentivizing demand responses and storage participation. The profile of real-time capacity cost obligations is illustrated for the California market to show the practicability of the method on a real-market.

Generation failures, strategic withholding, and capacity payments in the Turkish electricity market

Since the deregulation of significant parts of electricity markets in many countries worldwide, a generally pronounced matter is that firms strategically lower their generating capacity to raise electricity prices. This paper investigates whether strategic capacity withholding exists in the form of generation failures in the Turkish day-ahead market and whether the capacity remuneration mechanism contributes to the failure durations. The empirical results show strong support for strategic capacity withholding in the Turkish market, and the capacity mechanism adds to the duration of these failures. To the best of our knowledge, this is the first study to investigate capacity withholding considering centrally determined capacity prices and to focus on failure durations and the potential amount of power generation losses they cause. Our analysis conveys core messages for policymakers. A random verification mechanism may be implemented to verify that the failures are purely technical and apply penalties for nonperformance. Second, the Turkish capacity mechanism needs to be restructured to make it more compatible with performance incentives. Our analysis, while focused on the Turkish market, provides insights into the prevalent challenges and potential solutions tied to strategic capacity withholding in deregulated electricity markets globally, notably those employing capacity remuneration mechanisms.

An analysis of shortage pricing and capacity remuneration mechanisms on the pan-European common energy market

Various market design options have been implemented or proposed in order to address the missing money problem and facilitate the energy transition. In order to analyze the performance of energy-only markets, and energy markets supplemented by shortage pricing and/or capacity remuneration mechanisms, we develop a capacity expansion model for the European system. A number of market design scenarios are simulated until the year 2050. We consider a range of sensitivity analyses so as to understand the effect of various market design options on the performance of energy markets and their variants, as well as the effects of cross-border coordination. The findings of this paper indicate that capacity remuneration mechanisms are sensitive to numerous non-obvious design parameters and can sometimes lead to over-dimensioning, even if the effect on total cost can be less pronounced, whereas shortage pricing appears as a no-regret measure because price adders recede when there is abundant flexibility in the system.

The Challenge of Integrating Demand Response in Capacity Remuneration Mechanisms: Providing a Comprehensive Theoretical Framework

The Challenge of Integrating Demand Response in Capacity Remuneration Mechanisms: Providing a Comprehensive Theoretical Framework

Impact of remuneration, extrinsic and intrinsic incentives on interprofessional primary care teams: protocol for a rapid scoping review

IntroductionInterprofessional teams and funding and payment provider arrangements are key attributes of high-performing primary care. Several Canadian jurisdictions have introduced team-based models with different payment models. Despite these investments, the...

Capacity Mechanisms in Europe and the US: A Comparative Analysis and a Real-Life Application for Greece

This paper presents a comparative analysis of various capacity mechanisms that are either in force or under approval in key countries/regions in Europe and the US. A detailed analysis on the necessities that led to the establishment of the capacity mechanisms, along with various fundamental technical and operational features associated with the design and operation of different capacity mechanisms, mainly in Europe (Italy, France, Germany, Belgium, Poland, Great Britain, Ireland, Cyprus) and complementarily in the US (PJM, New England), are presented. This analysis is complemented by a real-life application regarding the long-term capacity remuneration mechanism that is expected to be established in Greece in the near future. A detailed simulation of the envisaged capacity mechanism auctions under differentiated scenarios has been performed, regarding the future Greek power system operating conditions during the forthcoming decade (2022–2031). Test results illustrate that the outcome of the auctions is heavily dependent on the future energy generation mix and the market participants’ bidding strategy. Whereas, the total cost that will have to be undertaken by the electricity supply companies and, ultimately, by the end-consumers for the financing of the proposed capacity mechanism lies in the range of 5.5–8.7 €/MWh for the entire study period.

ФОРМИРОВАНИЕ РЕГИОНАЛЬНОГО МЕХАНИЗМА ОПЛАТЫ ТРУДА В АГРАРНОМ СЕКТОРЕ

The concept of equalizing the quality of life of the population of different regions of the country as the basis for reducing the outflow of able-bodied population from rural settlements by using the agrarian district coefficient is considered. A change in the remuneration mechanism by adapting the district coefficient to the regions where agricultural production is located is taken as the basis. The basis of the methodological approach was the current system of zoning earnings by using a district coefficient that takes into account the differences in natural and climatic conditions in different regions of the Russian Federation, the peculiarities of the organization of labor and quality of life in them. For this purpose, the analysis of the application of the district coefficient in agriculture in relation to the ratings of regions on the ratio of available resources of households per family member with the subsistence minimum is carried out.

A game-theoretic remuneration mechanism for microgrid-aided load restoration service considering voltage stability

A game-theoretic remuneration mechanism for microgrid-aided load restoration service considering voltage stability

Improving access to quality contraceptive counselling in community pharmacy: examining the knowledge, attitudes and practices of community pharmacists in Australia

BackgroundAcross most of Australia, the role of community pharmacists in contraceptive care has been unchanged since 2004. To understand their current scope of practice and potential for practice advancements, we...

Effect of Wage Level, Wage Mechanism and Number of Family Members on the Welfare of Sanitary Officers at the Mandailing Natal District Environmental Service

This study aims to analyze the effect of wage levels, remuneration mechanisms and number of family members on the welfare of cleaning staff at the Mandailing Natal Regency Environmental Service. The dependent variable is welfare, while the independent variables are the level of wages, the mechanism of wages and the number of family members. This study uses primary data, with multiple linear regression data analysis method using SPSS 15. The research respondents were 52 people, the sampling method used was Simple Random Sampling technique. Based on the results of the first hypothesis test, it is known that the significant value of the wage level is 0.012 (sig < 0.05) with a t count value of 2.613 > 2.010 (t arithmetic > t table). The second hypothesis test shows a significant wage mechanism of 0.000 (sig < 0.05) with a t count value of 14.345 > 2.010 (t arithmetic > t table). And based on the third hypothesis test, it is known that the significant value of the number of family members is 0.000 (sig < with t value -5.050 < 2.010 (t count < t table). Based on the results of the fourth hypothesis test, it is known that the significant value is 0.000 (sig < 0.05) with a F count 287,670 is greater than F table 2.80 (F count > F table).The results of this study indicate Wage Level, Wage Mechanism and Number of Family Members simultaneously have a significant effect on welfare.

Financing renewables in the age of falling technology costs

Cost of renewable energies have dropped, approaching wholesale power price levels. As a result, the role of renewable energy policy design is shifting – from covering incremental costs towards facilitating risk-hedging. An analytical model of the financing structure of renewable investment projects is developed to assess this effect und used to compare different policy design choices: contracts for differences, sliding premia, fixed premia and a setting without dedicated remuneration mechanism. The expected benefit for electricity consumers from reduced risk and financing costs is approximated at the example of a 2030 scenario for Germany. Policies like sliding premia, previously evaluated as providing low-risk investment environments, provide for less risks hedging, when technology costs approach wholesale power prices. Contracts for differences provide in all scenarios the most effective hedge for investors against power prices uncertainty, enabling low-cost financing and reducing costs for consumers, while also hedging electricity consumers against high power prices.

What Incentives Are Required for Renewables to Provide Redispatch Services? A Simulation in a Multi-Market Setting

Renewable energy sources (RES) can provide valuable flexibility potential for multiple markets and grid services in the future. In this paper, the focus lies on the development of algorithms for an optimal dispatch and bidding of a RES-based virtual power plant (VPP) by considering current short-term and balancing market conditions in Austria, as well as a proposed redispatch market. Specifically, different pricing and bidding strategies for a redispatch market are compared and their feasibility is analyzed. The attractiveness of different pricing models and remuneration mechanisms for redispatch, as well as the influence of the redispatch call probability on the bidding behavior of the VPP, is investigated. The simulation of the bidding behavior is carried out using linear optimization techniques. The paper describes the algorithms as well as the assumptions for market rules in redispatch, balancing and short-term electricity markets. The results show that the probability to be activated for redispatch and thus the required incentives depend highly on the location of the plant. Pre-curtailment of the plant to offer positive redispatch is not recommended as the prices would need to be set at up to 200–300% of the day-ahead price.

Net-metering and net-billing in photovoltaic self-consumption: The cases of Ecuador and Spain

Solar Photovoltaics has become one of the cheapest sources of electricity, with the potential to expand further through distributed generation. PV self-consumption can empower electricity customers, transforming them into prosumers, but its success relies on appropriate regulations, especially in the treatment of surplus electricity, being net-metering and net-billing the most common remuneration mechanisms. As the number of such PV systems increases, regulation needs to evolve and may affect profitability.The purpose of this research is to take advantage of the Spanish experience, establishing key points that can improve the regulation in Ecuador and other countries. The operation of these remuneration schemes is studied through an economic analysis for a wide range of residential customers, highlighting the low profitability of small PV installations, which are not profitable for the average consumer in Ecuador. Grid parity is reached in Spain over 3 kW and in Ecuador only for the highest electricity consumers. Although the net-billing model is more effective in promoting PV self-consumption in the medium and long term, it requires additional conditions, such as those in Spain. Some recommendations are proposed, e.g. additional support with progressive tax reductions, simplication of permits and the introduction of collective self-consumption.

Methodology for obtaining simplified models for the long-term energy management of renewable assets under a high degree of uncertainty

This paper addresses the attainment of a methodology aimed at obtaining simplified models embedding the regulatory constraints imposed by the country-specific remuneration mechanisms in the energy management system of long operating life renewable assets under a high degree of uncertainty. This methodology, composed of different steps in which sensitivity analysis as well as Monte Carlo simulation play a key role, is focused on a significant case study that has implemented two of the most widely used worldwide remuneration mechanisms in the promotion of renewable energies, i.e., feed-in tariffs and auctions. The earnings before interest, tax, depreciation and amortization have been used as the output variable of the energy management model, as it is essential to take into account both revenues and operating costs of these renewable assets to manage them optimally. Some valid simplified models have been achieved by applying the proposed methodology to the case study with generalized errors below 5%. Specifically, one simplified energy management system model has been obtained under the feed-in tariff scheme, which involves acting on almost 40% of the equations of the original model and reducing the initial input parameters by 22%. Meanwhile, two simplified energy management system models have been obtained under the auction scheme. The most conservative simplified model involves acting on almost 50% of the equations of the original model and reducing the initial input parameters by 35%, while in the less conservative case it involves acting on more than 50% of the equations of the original model and reducing the initial input parameters by 42%. In short, although the uncertainty on the energy assets cannot be completely eliminated, it can be considerably reduced by facilitating the assessment of its prospective financial results. The validity of the achieved simplified models demonstrates the suitability and usefulness of the proposed simplifying methodology, providing a touch of quality in the long-term judgement and decision-making of the stakeholders when optimally managing renewable energy facilities under any type of remuneration scheme.

Investment analysis of power producers under reliability option scheme

Reliability Options (ROs) are one type of Capacity Remuneration Mechanisms (CRMS) to meet generation adequacy requirement, and it has been applied in some power markets. When a power producer sells a RO, he will receive an option fee but have to sell power at a price below the strike price which is set by the buying side. This mechanism may have some impacts on the investment decisions of power producers. In this paper, the investment timing of power producers is studied. A stochastic differential electricity price model and an investment decision model are built. Some characteristics, such as mean-reversion, multi-periodic and gradual growth are considered in the price model. Real option pricing model is used to make generation investment decision and it is equivalent to a linear complementarity problem. The numerical solution is obtained by the Successive Over Relaxation (SOR) method. The example results show that the different settings of strike price and option fee will lead to early or late investment.

The Energy Transition and the Value of Capacity Remuneration Mechanisms

The Energy Transition and the Value of Capacity Remuneration Mechanisms

Analysis of gender wage gap in Lithuania

This study aims to discern and quantify the personal and labour market characteristics, which are most relevant to the persistence of a gender wage gap in Lithuania. The Oaxaca-Blinder model, employed in this study, revealed the largest explained gender wage gap to be attributable to the characteristics of occupation and industry. These contribute to the gap mainly by the horizontal and vertical segregation effects, as women are more concentrated in typically ‘feminine’ jobs, which pay less. The educational attainment of women is slightly higher than that of men, and this reduces the gender wage gap in the Lithuanian labour market. The analysis also revealed that work in the public sector entails an increase in the gap despite greater wage transparency and a more regulated remuneration mechanism. This is due to the ‘glass ceiling’ effect or the pervasive resistance to the efforts of female workers to reach the top rank positions, which we find to be stronger in the public sector.