Research

Intrinsic Motivation, Human Capital, and Productivity: Evidence from Government Shutdowns (August 2025) with Christoph Herpfer and Gonzalo Maturana

Abstract: We study how intrinsic motivation affects human capital retention and productivity using administrative data on U.S. federal employees. We exploit quasi-random exposure to government shutdowns as shocks to intrinsic motivation and show that affected employees are 31% more likely to separate within one year. An estimated separation model implies that the shock is equivalent to a 10% salary cut. The effect is strongest among young, female, college-educated professionals. Consistent with a loss of valuable human capital, performance declines in high-skill functions, leading to financial losses. Our findings highlight the economic value of intrinsic motivation and its importance for organizational performance.