nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2011‒06‒11
fourteen papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Career Concerns and Firm – Sponsored General Training By Christos Bilanakos
  2. Optimal Contracts and Investment in General Human Capital under Common Agency By Christos Bilanakos
  3. Non Cognitive Skills and Personality Traits: Labour Market Relevance and their Development in Education & Training Systems By Brunello, Giorgio; Schlotter, Martin
  4. The Origins of Technolinguistic Diversity By Stelios Michalopoulos
  5. Promoting return and circular migration of the highly skilled By Hercog, Metka; Siegel, Melissa
  6. Cooperative Attitudes in Nonprofit Firms. Evidence from An Artefactual Field Experiment with Workers of Social Cooperatives By Luigi Mittone; Matteo Ploner
  7. Field Experiments with Firms By Bandiera, Oriana; Barankay, Iwan; Rasul, Imran
  8. The Evolution of the Modern Worker: Attitudes to Work By Alex Bryson; John Forth
  9. The Child Quantity-Quality Trade-Off During the Industrial Revolution in England By Marc Klemp; Jacob Weisdorf
  10. Skill-Biased Technological Change and the Business Cycle By Balleer, Almut; van Rens, Thijs
  11. Gender, Productivity and the Nature of Work and Pay: Evidence from the Late Nineteenth-Century Tobacco Industry By Björn Eriksson; Tobias Karlsson; Tim Leunig; Maria Stanfors
  12. The Returns to Skill and Racial Difference in Parenting: Evidence from the Civil Rights Movement By Owen Thompson
  13. Compensation and Incentives in german Corporations By Moritz Heimes; Steffen Seemann
  14. Does Competition Raise Productivity Through Improving Management Quality? By John Van Reenen

  1. By: Christos Bilanakos
    Abstract: This paper studies the provision of firm-sponsored general training in the presence of workers’ career concerns. We use a model building on the argument that the acquisition of general skills increases the worker’s bargaining power vis-a-vis the employer. In this context, we show that the worker’s implicit incentives to provide effort increase with the level of acquired general training. The employer takes this reciprocal effect into account and is thus more willing to invest in general human capital in the first place. When the positive effect of training on worker’s incentives is strong enough, the equilibrium outcome may even involve overinvestment in general training. It is also shown that a sharper increase in worker’s power associated with additional training may strengthen the employer’s investment incentives and have beneficial effects on welfare.
    Keywords: General Training, Career Concerns, Power.
    Date: 2011–05
  2. By: Christos Bilanakos
    Abstract: This paper studies contracts and incentives to invest in general human capital under common agency. Both the worker and the employer have too weak investment incentives in equilibrium. The employer’s underinvestment results from his failure to internalize the positive impact of his investment on other firms’ productivity as well as from the fact that he gives a share of output to the worker in order to induce a higher effort contribution. The worker anticipates that she will not be the full residual claimant of benefits and underinvests in equilibrium, too. A benevolent government will choose a set of subsidies such that the worker’s investment relative to the employer is equal to the first-best relative investment intensity. If the number of employers is small, then the worker’s investment level is relatively low and the government must give a relatively higher subsidy to the worker in order to stimulate her investment incentives.
    Keywords: General Human Capital, Common Agency, Contracts.
    Date: 2011–05
  3. By: Brunello, Giorgio (University of Padova); Schlotter, Martin (Ifo Institute for Economic Research)
    Abstract: This paper reviews the empirical economic literature on the relative importance of non cognitive skills for school and labour market outcomes, with a focus on Europe. There is evidence that high cognitive test scores are likely to result not only from high cognitive skills but also from high motivation and adequate personality traits. This suggests that part of the contribution of cognitive skills to economic growth could be due to personality traits. Across large parts of the literature, there is consensus that non cognitive skills have important effects both on school attainment and on labour market outcomes. These effects might be as important as the effects of cognitive skills. Less consensus exists on the malleability of non cognitive skills, with some arguing that these skills can be altered until the end of teenage years and others claiming that emotional intelligence can be changed at any age. Most of what economists know about the technology of non cognitive skill formation concerns early educational levels, such as preschools and schools. While it is difficult to argue that all relevant skill formation ends before labour market entry, there is scant evidence on the role of the workplace in the maintenance and development of existing skills. Clearly, more research in this area is needed.
    Keywords: non cognitive skills, Europe
    JEL: J24
    Date: 2011–05
  4. By: Stelios Michalopoulos (Tufts University and the Institute for Advanced Study)
    Abstract: This study explores the determinants of ethnolinguistic diversity within as well as across countries shedding light on its geographic origins. The empirical analysis conducted across countries, virtual countries and pairs of contiguous regions establishes that geographic variability, captured by variation in regional land quality and elevation, is a fundamental determinant of contemporary linguistic diversity. The findings are consistent with the proposed hypothesis that differences in land endowments gave rise to location-specific human capital, leading to the formation of localized ethnicities.
    Keywords: Ethnic Diversity, Geography, Growth, Languages, Human Capital
    JEL: O10 O40 N50 Z10
    Date: 2011–05
  5. By: Hercog, Metka (Maastricht Graduate School of Governance, Maastricht University); Siegel, Melissa (Maastricht Graduate School of Governance, Maastricht University)
    Abstract: Migration of skilled workers from developing countries has increased substantially in recent years. Traditionally, such patterns raised fears on the ground of the associated 'brain drain' as human capital formation is considered to be of central importance to the development and reduction of poverty levels. Therefore, any loss of skilled workers through migration was considered harmful to the achievement of development goals. In contrast, the new body of literature emphasizes the positive incentive and feedback effects which skilled migration has on sending countries' development as well as on other stakeholders. While most papers on the impacts of migration on development focus on remittances and low-skilled migration, we emphasize the effects of skilled return migrants which bring about the transfer of knowledge and skills. This paper examines five levels of policy concerning the mobility of skilled workers. Because of their differing positions, we examine the position of sending and receiving countries with regard to skilled migration separately. We look at receiving country policies, sending country policies, bilateral approaches, regional approaches and global approaches. This paper first explores what options are theoretically discussed at the five levels of analysis. Secondly, we observe what kinds of policies are actually used in practice and which policies show some evidence of success. We also systematically discuss the advantages and disadvantages (or limitations) of each policy option.
    Keywords: return migration, highly skilled, migration, immigration, skilled migration, developing countries, human capital, skills
    JEL: J24 O15 O33
    Date: 2011
  6. By: Luigi Mittone; Matteo Ploner
    Abstract: We investigate strategic choices of individuals working for social cooperatives in Italy. Specifically, a 2-players Prisoner’s Dilemma is administered as an attachment to a nationwide survey of nonprofit organizations. We experimentally manipulate social proximity of the participants and efficiency of cooperation. We show that higher efficiency of cooperation has a significant positive impact on the cooperation rate in the game, while closer social proximity does not significantly affect choices. In addition, a positive correlation between perceived organizational fairness and self–reported intrinsic motivation is identified in the sample under investigation. This finding provides stimulating insights on the interplay between organizational features and workers’ motivational factors.
    Keywords: Cooperation, Field Experiments, Social Dilemmas, Nonprofit Organizations
    Date: 2011
  7. By: Bandiera, Oriana; Barankay, Iwan; Rasul, Imran
    Abstract: We discuss how the use of field experiments sheds light on long standing research questions relating to firm behavior. We present insights from two classes of experiments: within and across firms, and draw common lessons from both sets. Field experiments within firms generally aim to shed light on the nature of agency problems. Along these lines, we discuss how field experiments have provided new insights on shirking behavior, and the provision of monetary and non-monetary incentives. Field experiments across firms generally aim to uncover firms' binding constraints by exogenously varying the availability of key inputs such as labor, physical capital, and managerial capital. We conclude by discussing some of the practical issues researchers face when designing experiments and by highlighting areas for further research.
    Keywords: field experiments; firms; organizations
    JEL: C9 M5
    Date: 2011–06
  8. By: Alex Bryson; John Forth
    Abstract: This paper examines how employees' experiences of, and attitudes towards, work have changed over the last quarter of a century. It assesses the extent to which any developments relate to the economic cycle and to trends in the composition of the British workforce. Many of the findings are broadly positive, particularly when compared with a picture of deterioration in the late 1980s and 1990s. The onset of a major recession in the late 2000s might have been expected to herald a fundamental shift in employees' attitudes to paid work and their working environment. The impression at the time of writing is, instead, of a more muted reaction than was seen in the early 1990s - in keeping with the more muted impact of the current recession on the labour market as a whole.
    Keywords: wages, job security, employee engagement, employment relations, recession
    JEL: J28 J31 J53
    Date: 2010–12
  9. By: Marc Klemp (Department of Economics, University of Copenhagen); Jacob Weisdorf (Department of Economics, University of Copenhagen)
    Abstract: We take Gary Becker's child quantity-quality trade-off hypothesis to the historical record, investigating the causal link from family size to the literacy status of offspring using data from Anglican parish registers, c. 1700-1830. Extraordinarily forhistorical data, the parish records enable us to control for parental literacy, longevity and social class, as well as sex and birth order of offspring. In a world without modern contraception and among the couples whose children were not prenuptially conceived we are able to explore a novel source of exogenous variation in family size: marital fecundability as measured by the time interval from the marriage to the first birth. Consistent with previous findings among historical populations, we document a large and significantly negative effect of family size on children's literacy.
    Keywords: Child Quantity-Quality Trade-Off; Demographic Transition; Industrial Revolution; Instrumental Variable Analysis; Human Capital Formation
    JEL: J13 N3 O10
    Date: 2011–05
  10. By: Balleer, Almut; van Rens, Thijs
    Abstract: Over the past two decades, technological progress in the United States has been biased towards skilled labor. What does this imply for business cycles? We construct a quarterly skill premium from the CPS and use it to identify skill-biased technology shocks in a VAR with long-run restrictions. Hours fall in response to skill-biased technology shocks, indicating that at least part of the technology-induced fall in total hours is due to a compositional shift in labor demand. Skill-biased technology shocks have no effect on the relative price of investment, suggesting that capital and skill are not complementary in aggregate production.
    Keywords: business cycle; capital-skill complementarity; long-run restrictions; skill premium; skill-biased technology; VAR
    JEL: E24 E32 J24 J31
    Date: 2011–06
  11. By: Björn Eriksson; Tobias Karlsson; Tim Leunig; Maria Stanfors
    Abstract: Women have, on average, been less well-paid than men throughout history. Prior to 1900, most economic historians see the gender wage gap as a reflection of men's greater strength and correspondingly higher productivity. This paper investigates the gender wage gap in cigar making around 1900. Strength was rarely an issue, but the gender wage gap was large. Two findings suggest that employers were not sexist. First, differences in earnings by gender for workers paid piece rates can be fully explained by differences in experience and other productivity-related characteristics. Second, conditioning on those characteristics, women were just as likely to be promoted to the better paying piece rate section. Neither finding is compatible with a simple model of sex-based discrimination. Instead, the gender wage gap can be decomposed into two components. First, women were typically less experienced, in an industry in which experience mattered. Second there were some jobs that required strength, for which men were better suited. Because strength was so valuable in the other jobs at this time, men commanded a wage premium in the general labour market, raising their reservation wage. Hiring a man required the firm to pay a 'man's wage'. This implies that firms that were slow to feminise their time rate workforce ended up with a higher cost structure than those that made the transition more quickly. We show that firms with a higher proportion of women in their workforce in 1863 were indeed more likely to survive 35 years later.
    Keywords: gender, productivity, discrimination, piece-rates, time-rates, labour markets, firm survival
    JEL: J16 J24 J71 J33 J40 L25
    Date: 2011–06
  12. By: Owen Thompson (University of Massachusetts Amherst)
    Abstract: On average, the parental practices adopted by African American parents of young children are much less cognitively stimulating than those of their white counterparts. This paper argues that these differences stem from the low rates of return to human capital historically experienced by African Americans. To study the relationship between the race-specific returns to skill and parenting, I use intergenerational data containing direct measures of parental behaviors, and examine the child rearing practices of mothers who came of age in the wake of the Civil Rights Movement, during a period of rapidly increasing returns to skill for African Americans in the US South. I find that among Southern African American mothers born between 1957 and 1964, each yearly birth cohort increased their parental investment levels by over .07 standard deviations, but that there was no increase among Southern whites or non-Southern African Americans. These differences are interpreted as being due to the disproportionately large increase in the rate of return to skill experienced by Southern African Americans, suggesting a strong relationship between the returns to human capital and parental behaviors. JEL Categories: J01; I24; J24; J71
    Keywords: race, parenting, returns to skill, achievement gap and human capital development
    Date: 2011–05
  13. By: Moritz Heimes (Department of Economics, University of Konstanz, Germany); Steffen Seemann (Department of Economics, University of Konstanz, Germany)
    Abstract: In this paper we analyze executive compensation in Germany for the period 2005-2009. We use a self-collected dataset on compensation arrangements in German corporations to estimate the impact of firm performance and firm risk on executive pay. To be in line with earlier studies in this literature, we first measure firm performance and firm risk based on stock market returns. Our findings support the prediction from agency theory that incentive pay decreases with firm risk. We find, however, that stock market returns have no explanatory power in the presence of accounting based performance measures. Based on accounting data we also find a positive impact of firm performance on executive pay and a negative relationship between firm risk and incentive pay for our sample period. We conclude that shareholders use accounting measures rather than stock market data to evaluate and pay for manager performance. We also find that with accounting data we can explain short-term bonus payments but not long-term oriented compensation in German corporations.
    Keywords: Pay for Performance, Executive Compensation, Incentives
    JEL: G30 J33 M12
    Date: 2010–05–31
  14. By: John Van Reenen
    Abstract: A classic question in industrial organization is whether competition raises productivity and if so, through what mechanism? I discuss recent empirical evidence from both large-scale databases and specific industries which suggests that tougher competition does indeed raise productivity and one of the main mechanisms is through improving management practices. To establish this, I report on new research seeking to quantify management. I relate this to theoretical perspectives on the economics of competition and management, arguing that management should be seen at least in part as a transferable technology. A range of recent econometric studies suggest that (i) competition increases management quality and (ii) improved management quality boosts productivity.
    Keywords: management, productivity, organization
    JEL: L2 M2 O32 O33
    Date: 2010–12

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