nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2011‒06‒25
nine papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Human Capital and Career Success: Evidence from Linked Employer-Employee Data By Frederiksen, Anders; Kato, Takao
  2. Optimal foreign direct investment in the presence of human capital formation By Asali, Muhammad; Cristobal-Campoamor, Adolfo
  3. Assessing the long-term effects of conditional cash transfers on human capital : evidence from Colombia By Baez, Javier E.; Camacho, Adriana
  4. Human capital, social capital and scientific research in Europe: an application of linear hierarchical models By Mathieu Goudard; Michel Lubrano
  5. Managerial incentives under competitive pressure: Experimental investigation By Ahmed Ennasri; Marc Willinger
  6. The roles of incentives and voluntary cooperation for contractual compliance By Simon Gaechter; Esther Kessler; Manfred Koenigstein
  7. Incentives vs. Selection in Promotion Tournaments: Can a Designer Kill Two Birds with One Stone? By Höchtl, Wolfgang; Kerschbamer, Rudolf; Stracke, Rudi; Sunde, Uwe
  8. How do Performance Targets Affect Future Performance by Students and Schools? By M. Sartarelli; A. Tampieri

  1. By: Frederiksen, Anders (Aarhus School of Business); Kato, Takao (Colgate University)
    Abstract: Denmark's registry data provide accurate and complete career history data along with detailed personal characteristics (e.g., education, gender, work experience, tenure and others) for the population of Danish workers longitudinally. By using such data from 1992 to 2002, we provide rigorous evidence for the first time for the population of workers in an entire economy (as opposed to case study evidence) on the effects of the nature and scope of human capital on career success (measured by appointments to top management). First, we confirm the beneficial effect of acquiring general human capital formally through schooling for career success, as well as the gender gap in career success rates. Second, broadening the scope of human capital by experiencing various occupations (becoming a generalist) is found to be advantageous for career success. Third, initial human capital earned through formal schooling and subsequent human capital obtained informally on the job are found to be complements in the production of career success. Fourth, though there is a large body of the literature on the relationship between firm-specific human capital and wages, the relative value of firm-specific human capital has been rarely studied in the context of career success. We find that it is more beneficial to broaden the breadth of human capital within the firm than without, pointing to the significance of firm-specific human capital for career success.
    Keywords: human capital, career development, occupations, internal promotion, external recruitment, top management
    JEL: J24 M5
    Date: 2011–06
  2. By: Asali, Muhammad; Cristobal-Campoamor, Adolfo
    Abstract: This paper gives both theoretical arguments and econometric support to the notion of optimal FDI levels, from the viewpoint of human-capital formation in the host country. The optimality of a limited FDI level depends on the local incentives to get trained. Those incentives are formed in the face of uncertainty and asymmetric information between the multinational and its potential workers. Our estimates confirm the significance of a negative, non-linear impact of FDI per capita on tertiary schooling, both in developed and developing countries.
    Keywords: FDI; Human-Capital Formation; Education; Skill Heterogeneity
    JEL: F23 J24
    Date: 2011–06–11
  3. By: Baez, Javier E.; Camacho, Adriana
    Abstract: Conditional cash transfers are programs under which poor families get a stipend provided they keep their children in school and take them for health checks. Although there is significant evidence showing that they have positive impacts on school participation, little is known about the long-term impacts of the programs on human capital. This paper investigates whether cohorts of children from poor households that benefited up to nine years from Familias en Acción, a conditional cash transfer program in Colombia, attained more school and performed better on academic tests at the end of high school. Identification of program impacts is derived from two different strategies using matching techniques with household surveys, and regression discontinuity design using a census of the poor and administrative records of the program. The authors show that, on average, participant children are 4 to 8 percentage points more likely than nonparticipant children to finish high school, particularly girls and beneficiaries in rural areas. Regarding long-term impact on tests scores, the analysis shows that program recipients who graduate from high school seem to perform at the same level as equally poor non-recipient graduates, even after correcting for possible selection bias when low-performing students enter school in the treatment group. Although the positive impacts on high school graduation may improve the employment and earning prospects of participants, the lack of positive effects on test scores raises the need to further explore policy actions to couple the program's objective of increasing human capital with enhanced learning.
    Keywords: Education For All,Tertiary Education,Primary Education,Secondary Education,Teaching and Learning
    Date: 2011–06–01
  4. By: Mathieu Goudard (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579); Michel Lubrano (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)
    Abstract: The theory of human capital is one way to explain individual decisions to produce scientific research. However, this theory, even if it reckons the importance of time in science, is too short for explaining the existing diversity of scientific output. The present paper introduces the social capital of Bourdieu (1980), Coleman (1988) and Putnam (1995) as a necessary complement to explain the creation of scientific human capital. This paper connects these two concepts by means of a hierarchical econometric model which makes the distinction between the individual level (human capital) and the cluster level of departments (social capital). The paper shows how a collection of variables can be built from a bibliographic data base indicating both individual behaviour including mobility and collective characteristics of the department housing individual researchers. The two level hierarchical model is estimated on fourteen European countries using bibliometric data in the fields of economics.
    Keywords: Economics of science; human capital; social capital; hierarchical models; European science
    Date: 2011–06–16
  5. By: Ahmed Ennasri; Marc Willinger
    Abstract: We investigate the effects of competition on managerial incentives and effort in a laboratory experiment. Each owner offers compensation to his manager in two different contexts: monopoly and Cournot duopoly. After accepting the compensation, the manager chooses an effort level to increase the probability of reduced costs of his firm. Theory predicts that the entry of a rival firm in a monopolistic industry affects negatively both the incentive compensation and the effort level. Our experimental findings confirm that the entry of a rival firm reduces the incentive compensation but not the manager’s effort level. However, despite the reduction of the incentive compensation, the manager continues to accept the contract offers and exert the same level of effort.
    Keywords: Managerial Incentives, Effort, Competition, Moral hazard, Experiments
    Date: 2011–06
  6. By: Simon Gaechter (University of Nottingham); Esther Kessler (University College London); Manfred Koenigstein (Universitaet Erfurt)
    Abstract: Efficiency under contractual incompleteness often requires voluntary cooperation in situations where self-regarding incentives for contractual compliance are present as well. Here we provide a comprehensive experimental analysis based on the gift-exchange game of how explicit and implicit incentives affect cooperation. We first show that there is substantial cooperation under non-incentive compatible contracts. Incentive-compatible contracts induce best-reply effort and crowd out any voluntary cooperation. Further experiments show that this result is robust to two important variables: experiencing Trust contracts without any incentives and implicit incentives coming from repeated interaction. Implicit incentives have a strong positive effect on effort only under non-incentive compatible contracts.
    Keywords: principal-agent games; gift-exchange experiments; incomplete contracts, explicit incentives; implicit incentives; repeated games; separability; experiments
    JEL: C70 C90
    Date: 2011–06
  7. By: Höchtl, Wolfgang (University of Innsbruck); Kerschbamer, Rudolf (University of Innsbruck); Stracke, Rudi (University of St. Gallen); Sunde, Uwe (University of St. Gallen)
    Abstract: This paper studies the performance of promotion tournaments with heterogeneous participants in two dimensions: incentive provision and selection. Our theoretical analysis reveals a trade-off for the tournament designer between the two goals: While total effort is maximized if less heterogeneous participants compete against each other early in the tournament, letting more heterogeneous participants compete early increases the accuracy in selection. Experimental evidence supports our theoretical findings, indicating that the optimal design of promotion tournaments crucially depends on the objectives of the tournament designer. These findings have important implications for the optimal design of promotion tournaments in organizations.
    Keywords: promotion tournaments, heterogeneity, incentive provision, selection
    JEL: M52 J33
    Date: 2011–05
  8. By: M. Sartarelli; A. Tampieri
    Abstract: The paper examines whether meeting performance targets in tests at school has an effeect on students' subsequent achievement in education and the take-up by schools of financial support from the government for students. We build a theoretical model to describe the channels through which students' belief of their ability, as proxied by previous performance in tests, affect their current effort in preparing for a test, and how previous performance affects the effort in teaching by a school. We find that an increase in the performance target in the first test has an ambiguous effect on the effort exerted for the second test. A higher performance target in the current test increases the effort of low-ability students and teaching effort for low ability students, while it has an ambiguous effect on high ability ones. Finally, an increase in government funding per student increases the effort by students.
    JEL: I22 I28
    Date: 2011–06
  9. By: Antoine BERETTI; Charles FIGUIERES; Gilles GROLLEAU
    Abstract: Economists recognize that monetary incentives can backfire through the crowding-out of moral and social motivations leading to an overall decrease of the desired behavior. We implement a field experiment where participants are asked to fill a questionnaire on pro-environmental behaviors under different incentive schemes, either with no monetary incentive (control) or with low or high monetary incentive directed either to the respondents or to an environmental cause. We investigate whether (i) there is a significant crowding-out effect, (ii) directing monetary incentive to the cause rather than to the respondents reduces the overall impact of a crowding-out effect, and (iii) offering the choice regarding the money recipient aects participation. Except for a high monetary incentive where the respondent chooses himself the end-recipient, we show that monetary rewards directed either at the individual or at the cause actually harms intrinsic motivations, but not to the same extent. We formalize our results building on an adaptation of an original model by Bolle and Otto (2010) and introduce agents heterogeneity in terms of intrinsic motivation. This heterogeneity has key implications for the understanding of the crowding-out eect. Several policy recommendations regarding the use of market-based instruments are drawn.
    Date: 2011–06

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