nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2011‒04‒16
ten papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. On the impact of the TFP growth on the employment rate: does training on-the-job matter? By Moreno-Galbis, Eva
  2. Links Between Literacy and Numeracy Skills and Labour Market Outcomes By Shomos, Anthony
  3. Segmented Life-cycle Labor Markets – Portuguese Evidence By Ana Paula Martins
  4. Entrepreneurship and Role Models By Niels Bosma; Jolanda Hessels; Veronique Schutjens; Mirjam van Praag; Ingrid Verheul
  5. Investments in Intangible Assets and Australia’s Productivity Growth — Sectoral Estimates By Barnes, Paula
  6. Incentives and Cooperation in Firms: Field Evidence By Berger, Johannes; Herbertz, Claus; Sliwka, Dirk
  7. Job Satisfaction: A Challenging Area of Research in Education By kainth, Dr .Gursharan Singh; Kaur, Mrs. Gurinder
  8. Sorting on Skills and Preferences: Tinbergen Meets Sattinger By Dupuy Arnaud
  9. Do Performance Targets Affect Behaviour? Evidence from Discontinuities in Test Scores in England By Marcello Sartarelli
  10. Paid to Perform? Compensation Profiles under Pure Wage and Performance Related Pay Arrangements By Sessions, John G.; Skåtun, John D.

  1. By: Moreno-Galbis, Eva
    Abstract: This paper seeks to gain insights on the relationship between growth and unemployment when considering heterogeneous agents in terms of skills. We allow for the possibility of training for unskilled employed workers and for the possibility of human capital depreciation for skilled unemployed workers. These features are introduced in an endogenous job destruction framework µa la Mortensen and Pissarides (1998). We show that, when growth accelerates, a larger share of unskilled workers gets trained, increasing the incentives of ¯rms to update the job-speci¯c technology, rather than destroying it. The positive impact of growth on the employment rate is then magni¯ed and the predicting ability of the model to reproduce the sensibility of employment with respect to growth too. When calibrated, the model manages to reproduce the aggregate capitalization e®ect estimated on the basis of OECD data. Fur- thermore, whereas for skilled and unskilled workers getting trained growth yields a reduction in the unemployment rates, for unskilled workers not getting trained growth fosters a rise in the unemployment rates.
    Keywords: TFP growth; Unemployment; Training, Human Capital Depreciation; Capitalization; Creative Destruction Effect
    JEL: J23 J24 O33
    Date: 2010–09
  2. By: Shomos, Anthony (Productivity Commission)
    Abstract: This Productivity Commission staff working paper (by Anthony Shomos) was released in October 2010. Literacy and numeracy skills are key components of human capital, which is an important driver of economic growth. This paper utilises data from a 2006 survey on the literacy and numeracy skills of the Australian adult population. <p>Models were used to estimate the effect of improved literacy and numeracy skills on the probability of labour force participation and on wages. Results confirm previous research in the human capital literature –– that improving literacy and numeracy skills has a positive, statistically significant effect on labour market outcomes. <p>Improving educational attainment was also estimated to have a positive, statistically significant effect on labour force participation and on wages. However, once literacy and numeracy skills were controlled for, the effect of increasing educational attainment on labour force participation and on wages was reduced. Some of the benefit occurs because more highly educated people tend to have higher literacy and numeracy skills. <p>Literacy and numeracy skills are developed through education, but they can also be enhanced in other ways. Understanding the factors that influence literacy and numeracy skills is important and could be further explored with the data used in this paper. <p>The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.
    Keywords: literacy; numeracy; labour markets; human capital; labour force participation
    JEL: J24
    Date: 2010–08
  3. By: Ana Paula Martins
    Abstract: The paper contrasts the pattern of returns to human capital in different economic sectors. As job mobility, especially across sectors, is limited, it is argued that coefficients of experience in earnings regressions may capture or be interpreted as the growth rate – net of depreciation – of earnings ability propitiated by schooling when years of education are also included in the right hand-side of the equation. As a consequence, under long-term contracts, labor market equilibrium is compatible with different “gross” rates of return to schooling, provided initial earnings levels allow for the same accumulated present value. That implies a special relation between the intercept and experience coefficient of earnings regressions performed for different sectors. Additionally, implications of (log-stable) nonstationary environments for rate of return inference from log-earnings regressions – appropriate for pooled (or panel) estimation and nominal earnings information - are also investigated. Then, the trend coefficient measures the (steady-state) nominal productivity growth; the experience coefficients approximate individuals’ earnings profiles growth rates net of the human capital depreciation rate; schooling’s, the nominal rate of return in the economy net of the nominal productivity growth rate. Tests of the hypothesises are provided, along with the inspection of the determinants – including financial ratios and productive organization indicators, calculated from aggregate balance sheet information - of the observed differences across industries. A study of the estimated variances of rate of return estimates was also conducted, as an attempt to capture features of financial risk in human capital investment.
    Keywords: Returns to Schooling; Earnings/Wage Growth; Wage Determinants; Segmented Labor Markets. Industry-Specific Human Capital. Human Capital Risk. Financial Structure and Performance. Weighted Principal Components.
    JEL: J24 J31 J42 I2 G30 C13 C39
    Date: 2011–04–05
  4. By: Niels Bosma (Utrecht University); Jolanda Hessels (EIM Business School and Policy Research, Zoetermeer, and Erasmus School of Economics, Rotterdam); Veronique Schutjens (Utrecht University); Mirjam van Praag (University of Amsterdam); Ingrid Verheul (Rotterdam School of Economics (EUR))
    Abstract: In the media role models are increasingly being acknowledged as an influential factor in explaining the reasons for the choice of occupation and career. Various conceptual studies have proposed links between role models and entrepreneurial intentions. However, empirical research aimed at establishing the importance of role models for (nascent) entrepreneurs is scarce. Knowledge of the presence of entrepreneurial role models, their specific functions and characteristics is therefore limited. Our explorative empirical study is a first step towards filling this gap. Our study is based on the outcomes of a questionnaire completed by a representative sample of 292 entrepreneurs in three major Dutch cities - entrepreneurs who have recently started up a business in the retail, hotel and restaurant sectors, business services and other services. We provide indications of the presence and importance of entrepreneurial role models, the function of these role models, the similarity between the entrepreneur and the role model, and the strength of their relationship.
    Keywords: role models; entrepreneurs; human capital; new firm start-ups
    JEL: L26 M13 J24
    Date: 2011–04–01
  5. By: Barnes, Paula (Productivity Commission)
    Abstract: This Productivity Commission staff working paper (by Paula Barnes) examines sectoral investment in intangible assets in Australia following on from a previous paper on an examination of intangibles assets in the market sector as a whole. It highlights some significant issues relating to the measurement of intangibles and their contribution to productivity, finding that estimates of intangibles at the aggregate level mask considerable sectoral differences. <p>In recent years increased attention has been given to the contribution to economic growth of intangible assets such as knowledge, firm-specific skills and better ways of doing business. But most intangibles are treated as current expenses in official statistics, rather than as assets — despite the fact that they provide services in more than one period. This makes it difficult to examine their role in the economy. It leads to an understatement of investment in the economy and may also affect measures of productivity growth. <p>This paper addresses two questions: does the importance of intangibles as part of total investment vary across sectors?; and does the exclusion of many intangibles from investment measurement affect the measures of sectoral economic growth and productivity? <p>The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.
    Keywords: intangible assets; sectoral investment; productivity; assets; human capital; R&D; research and development; brand equity
    JEL: E24 O30 O40
    Date: 2010–07
  6. By: Berger, Johannes (University of Cologne); Herbertz, Claus (University of Cologne); Sliwka, Dirk (University of Cologne)
    Abstract: We empirically investigate the impact of incentive scheme structure on the degree of cooperation in firms using a unique and representative data set. Combining employee survey data with detailed firm level information on the relative importance of individual, team, and company performance for compensation, we find a significant positive relation between the intensity of team incentives and several survey measures of cooperation. Moreover, higher powered team incentives are associated with lower degrees of absenteeism while this is not the case for individual incentives.
    Keywords: incentives, cooperation, teams, helping effort
    JEL: D23 J33 M52 M54
    Date: 2011–04
  7. By: kainth, Dr .Gursharan Singh; Kaur, Mrs. Gurinder
    Abstract: Indian Education Commission (1966) describes teacher as one of the most important factors contributing to the national development. He is the pivot around which all the educational programs, such as curriculum, syllabus, textbooks, evaluation, etc., rotate. The best system of education may fail to achieve the desire ends in the absence of sincere, competent and professionally aware teachers. National Policy on Education (1986) rightly states “No people can rise above the level of its teachers”. As a person imbibes, interprets and disseminates the relevant items of culture and traditions of the past, he creates new knowledge, promotes innovations, critically appraises the past and its traditions and cultures, sifts the grain from the chaffe, strengthens social and economic fabrics of the nation. Education is basically the influence which the teacher exerts on the students entrusted to his care. Effective teachers are required in the classroom because even the best curriculum and most perfect syllabus remain ineffective in the absence of a good teacher. The teaching profession, according to Daniels (1973) inherently entails certain well-known self obvious and implicit obligations, commitments and expectations from its members. The society bestows its trust on all the professionals to rise to the demands of the profession. In order to perform his role of paramount and vital significance effectively, a teacher should be professionally aware of professional demands and obligations placed on him by the profession. Further the role of teachers in influencing the future of our advancing national development is becoming increasingly important. Development of the country requires a high rate of production and fullest possible utilization of both human as well as material resources. Nowadays, there is, however, a general feeling that the teachers do not have satisfaction in their job. There seems to be growing discontentment towards their job as a result of which standard of education are falling. Teachers are dissatisfied in spite of different plans and programs, which have been implemented to improve their job. Job satisfaction consists of total body of feeling about the nature of job promotion, nature of supervision etc. that an individual has about his job. If the sum total of influence of these factors gives arises to feelings of satisfaction, the individual has job satisfaction. Under such circumstances it is essential that the proper understanding concerning satisfaction emanating from the job life be obtained.
    Keywords: MPS- Motivating Potential Score; QWL- Quality of Work-Life; GNDU- Guru Nanak Dev University; GOC- Government Owned Colleges; GAC-Government Aided Colleges; SFC- Self- Financed Colleges
    JEL: I20 I21 D80
    Date: 2010–12
  8. By: Dupuy Arnaud (METEOR)
    Abstract: This paper proposes an assignment model where sorting occurs on attributes that are simultaneously a skill (Sattinger, 1979) and a preference (Tinbergen, 1956). The key feature of this model is that the wage function admits both jobs'' and workers'' attributes as arguments. Since this function is generically nonlinear (Ekeland et al., 2004), even under positive assortative matching, the correlation between the contribution of workers'' attributes to wages and that of jobs'' attributes can vary from -1 to 1 depending on the parameters of the model, i.e. preference, technology and the distribution of both sets of attributes. The paper discusses a closed form solution of the model, presents conditions for the nonparametric identification of compensating wage differentials and nonadditive marginal utility functions using observations from a single hedonic market and proposes anonparametric estimator.
    Keywords: microeconomics ;
    Date: 2011
  9. By: Marcello Sartarelli (Department of Quantitative Social Science, Institute of Education, University of London. 20 Bedford Way, London WC1H 0AL, UK.)
    Abstract: Performance targets are ubiquitous in all areas of an individual's life such as education, jobs, sport competitions and charity donations. In this paper I assess whether meeting performance targets in tests at school has an effect on students' subsequent behaviour. This is helpful to test whether motivation and effort by students, parents and schools that the targets may induce, contribute to explain observed behaviour. I address potentially spurious correlations between test scores and behaviour by exploiting a regression discontinuity design in tests and a linked dataset of test scores and subsequent behaviour by students in compulsory education in England. I find that meeting a target that the government sets for students at age 11 has an insignificant effect on outcomes such as the probability of absence from school or of a police warning. I also find that meeting other targets for high and low ability students decreases the probability of being bullied by up to 34% with respect to the mean probability of such outcomes. The effects are heterogeneous as they vary by gender, parents' education level and type of behaviour. Overall, the research design offers a valuable test to assess unintended consequences that meeting the target or failing to meet it may lead to. The lack of a significant effect of targets on suspension and expulsion from school, as well as police warnings, suggests no adverse behavioural effect of performance targets, which is reassuring evidence on the design of tests in compulsory education. By using Probit estimates, one would conclude that meeting a target has an impact on behaviour. Regression discontinuity estimates show instead an insignificant effect at the expected target and a significant one at other targets for certain outcomes, although smaller than Probit estimates.
    Keywords: Absence, ullying, education, performance targets, police warning, regression discontinuity, suspension, test scores
    JEL: C21 I20 I21 I28
    Date: 2011–03–17
  10. By: Sessions, John G. (University of Bath); Skåtun, John D. (University of Aberdeen)
    Abstract: Whilst existing efficiency wage literature assumes detection probabilities of shirkers are exogenous, this paper finds them positively and endogenously dependent on non-shirkers' effort. It shares the result with the endogenous monitoring models where, in some regions, workers reduce effort in response to higher wages, but differs in that firms never operate in those regions. The paper further provides theoretical reasons for the empirical regularity that increased usage of performance related pay (PRP) flattens the pay-tenure profile. Wages and effort increase over the lifecycle, both with and without PRP, but with late payments in PRP falling short of pure wage arrangements.
    Keywords: monitoring, tenure, efficiency wages
    JEL: J33 J41 J54
    Date: 2011–04

This nep-hrm issue is ©2011 by Tommaso Reggiani. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.