nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2011‒08‒22
eleven papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Estimating the Permanent Growth Effects of Human Capital By Rao, Bhaskara; Shankar, Sriram
  2. Life Expectancy and Schooling: New Insights from Cross-Country Data By Hazan, Moshe
  3. Continuous Training, Job Satisfaction and Gender: An Empirical Analysis Using German Panel Data By Claudia Burgard; Katja Görlitz
  4. On Educational Performance Measures By Muriel, Alastair; Smith, Jeffrey A.
  5. Managerial Incentives and Compensation in a Global Market By Yanhui Wu
  6. The Study of Compensation Systems Through the Lens of Self-Determination Theory: Reconciling 35 Years of Debate By Jacques Forest; Marylène Gagné
  7. A Simple Theory of Managerial Talent, Pay Contracts and Wage Distribution By Yanhui Wu
  8. The Signalling Role of Promotion in Japan By Kazuaki Okamura
  9. Taxation and Regulation of Bonus Pay By Besley, Timothy J.; Ghatak, Maitreesh
  10. HRM Practices and Performance of Family-Run Workplaces: Evidence from the 2004 WERS By Siebert, W. Stanley; Peng, Fei; Maimaiti, Yasheng
  11. Performance Pay and Information: Reducing Child Malnutrition in Urban Slums By Singh, Prakarsh

  1. By: Rao, Bhaskara; Shankar, Sriram
    Abstract: This paper estimates with the least trimmed least squares (LTS) a specification suitable to estimate the permanent growth effects of human capital, using educational attainment (H) as a proxy. Our results show that H has significant permanent growth effects but these are much smaller than in Temple (1999).
    Keywords: Least Trimmed Squares; Human capital; Educational attainment; Permanent growth effects
    JEL: O15 O40
    Date: 2011–08–12
  2. By: Hazan, Moshe
    Abstract: I argue that distinguishing between life expectancy at birth and life expectancy beyond the crucial early childhood years affects the relationship between life expectancy and schooling in a meaningful way. In particular, I show that while the change in life expectancy at birth between 1960 and 1990 is positively correlated with percentage change in schooling, the change in life expectancy at age 5 is, at best, uncorrelated with percentage change in schooling. This evidence weakens the quantitative importance of increasing life horizon beyond the early crucial childhood years for formal acquisition of human capital.
    Keywords: Human Capital; Life expectancy
    JEL: J24 O11
    Date: 2011–08
  3. By: Claudia Burgard; Katja Görlitz
    Abstract: Using data from the German Socio-Economic Panel (SOEP), this paper analyzes the relationship between training and job satisfaction focusing in particular on gender differences. Controlling for a variety of socio-demographic, job and firm characteristics, we find a difference between males and females in the correlation of training with job satisfaction which is positive for males but insignificant for females. This difference becomes even more pronounced when applying individual fixed effects. To gain insights into the reasons for this difference, we further investigate training characteristics by gender. We find that financial support and career-orientation of courses only seems to matter for the job satisfaction of men but not of women.
    Keywords: Training, job satisfaction, gender differences, fixed effects
    JEL: I29 J24 J28 M53
    Date: 2011
  4. By: Muriel, Alastair (Institute for Fiscal Studies, London); Smith, Jeffrey A. (University of Michigan)
    Abstract: Quantitative school performance measures (QPMs) are playing an ever larger role in education systems on both sides of the Atlantic. In this paper we outline the rationale for the use of such measures in education, review the literature relating to several important problems associated with their use, and argue that they nonetheless have a positive role to play in improving the educational quality. We delineate several institutional reforms which would help schools to respond "positively" to QPMs, emphasizing the importance of agents' flexibility to change the way they work, and the importance of a sound knowledge base regarding "what works" in raising attainment. We suggest that the present institutional setups in both England and the US too often hold schools accountable for outcomes over which they have little control – but that such problems are far from insurmountable.
    Keywords: performance measures, education incentives, school quality
    JEL: H52 I2 I28
    Date: 2011–08
  5. By: Yanhui Wu
    Abstract: This paper embeds a principal-agent firm in an otherwise standard trade model a la Melitz (2003) to investigate the impact of globalization on the provision of managerial incentives and on the distribution of managerial compensation. Facing contractual frictions due to limited liability, firms with heterogeneous productivity endogenously sort into different pay structures to mitigate different levels of agency problems. More productive firms use a higher-powered incentive contract while less productive firms use a lowered- powered one. International trade within an industry enhances market competition, inducing resources reallocated from low productivity domestic firms to high productivity exporting .rms. The uneven effects of international trade on firms that differ in their exporting status and pay structure result in more prevalence of high-powered incentive pay, a larger wage gap between managers and production workers, and a higher level of wage inequality among managers.
    Keywords: trade, heterogeneous firms, pay contracts, managerial incentives, managerial compensation, wage inequality
    JEL: D2 F1 J3 L1
    Date: 2011–08
  6. By: Jacques Forest; Marylène Gagné
    Abstract: Although compensation specialists generally argue for incentive systems that link rewards to performance, self-determination theory argues that such contingent rewards can have detrimental effects on autonomous motivation. The authors present a model of the motivational effects of compensation systems that attempts to reconcile the self-determination theory view and the literature on compensation. This model evaluates how compensation system characteristics, such as the amount and variability of pay, can influence the satisfaction of the needs for autonomy, competence, and relatedness, which in turn influence autonomous work motivation. <P>Si les spécialistes en rémunération sont généralement en faveur des systèmes de primes qui lient la récompense à la performance, la théorie de l’autodétermination, quant à elle, suggère que de telles récompenses contingentes peuvent nuire à la motivation autonome. Nous présentons un modèle des effets motivationnels engendrés par les systèmes de rémunération qui tente de faire concorder la théorie de l’autodétermination avec la documentation sur la rémunération. Ce modèle évalue de quelle façon les caractéristiques des systèmes de rémunération, tels les variations de la rémunération et son niveau, peuvent influer sur la satisfaction du besoin d’autonomie, la compétence et le rapprochement, lesquels peuvent, à leur tour, marquer la motivation autonome au travail.
    Keywords: self-determination theory, compensation, rewards, incentives, organizational justice., théorie de l’autodétermination, compensation, récompenses, mesures incitatives, justice organisationnelle.
    Date: 2011–08–01
  7. By: Yanhui Wu
    Abstract: This paper develops a simple theory of pay structures and pay levels across heterogeneous agents by bringing together optimal contracts inside the firm and competitive resource allocation in the market. The central idea is that more talented people tend to create greater value but face larger conflicts of interest in their employment relationship, and different pay contracts are optimally designed to mitigate different levels of agency problems. Sorted by their talent, people are stratified into production workers, self-employed, salaried managers with low-powered performance pay, and CEOs with high-powered equity-based pay. In a general equilibrium framework, I show that the sorting of managerial talent into pay contracts is tied to firm size. The theory highlights that high-powered incentive pay and large scales of operations cause the disproportionately large wage earnings at the top, and are the main source of income inequality. Market forces that reallocate resources from smaller to larger firms tend to increase the threshold talent for becoming a manager, increase the prevalence of high-powered incentive pay, raise the top earnings, and spread out the wage distribution.
    Keywords: Managerial Talent, Limited Liability, Provision of Incentives, Pay Structure, CEOPay, Wage Distribution
    JEL: D2 J3 L1 L2 M5
    Date: 2011–08
  8. By: Kazuaki Okamura (Department of Economics and Social Sciences, Faculty of Humanities and Economics, Kochi University)
    Abstract: Under asymmetric information conditions regarding worker productivity between current and prospective employers, a worker's promotion signals his/her productivity. In this Paper, we tested the signalling role of promotion, using Japanese micro-level data. We found that among lower-level positions, promotion seems to signal a worker's ability, and both the business cycle and foreign-capital ratio of his/her company significantly strengthen this effects. These results suggest that external labour market conditions (i.e. asymmetric information regarding a worker's abilities between a current and prospective employer) affect the economic differences among workers in the internal labour market.
    Keywords: Strategically delayed promotion, Signalling, Wage growth, Japan.
    JEL: C23 J31 L22
    Date: 2011–08
  9. By: Besley, Timothy J.; Ghatak, Maitreesh
    Abstract: We explore the consequence for taxation and regulation of bonus pay when investors are protected by taxpayers from downside risk. The paper develops a model where workers in financial sector firms make decisions about effort and risk-taking which are influenced by the structure of bonus pay. Bailouts lead to too little effort, too much risk taking and increase inequality. We show that the optimal structure of bonuses can be implemented by a combination of a regulation on the structure of bonuses and a tax on their level.
    Keywords: bonus; incentives; taxation
    JEL: D53 D86 H21
    Date: 2011–08
  10. By: Siebert, W. Stanley (University of Birmingham); Peng, Fei (University of Birmingham); Maimaiti, Yasheng (University of Birmingham)
    Abstract: This paper analyses HRM practices of family-run workplaces using the 2004 WERS. Family-ownership and management within workplaces in the corporate sector is our focus. This family-run group represents nationally about 26% of workplaces and 14% of employment. We find that employees in this group have stronger feelings of job security and loyalty, which we relate to family companies' HRM practices such as stronger support for long-term employment – an "inclusivity" linked to long-term orientation. We also find that family-owned and managed workplaces have better financial and quality performance measures than non-family, to which family-related HRM practices contribute.
    Keywords: job security, loyalty, family business, HRM practices, financial performance
    JEL: J01 L26 M54
    Date: 2011–08
  11. By: Singh, Prakarsh
    Abstract: This paper provides evidence for the effectiveness of performance pay to government workers and how performance pay interacts with demand-side information. In an experiment covering 145 child day-care centres, I implement three separate treatments. First, I engineer an exogenous change in compensation for childcare workers from fixed wages to performance pay. Second, I only provide mothers with information without incentivizing the workers. Third, I combine the first two treatments. This helps us identify if performance pay and public information are complements or substitutes in reducing child malnutrition. I find that combining incentives to workers and information to mothers reduces weight-for-age malnutrition by 4.2% in 3 months, although individually the effects are negligible. This complementarity is shown to be driven by better mother-worker communication and the mother feeding more calorific food at home. There is also a sustained long-run positive impact of the combined treatment after the experiment concluded.
    Keywords: Performance pay; Child malnutrition; Public health; Information; Complementarity; Nutrition; Public sector; Urban slums
    JEL: J13 I12 H41 M52 L38 D12 H75 I18 I38 D61 J33
    Date: 2011–07

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