nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2011‒11‒07
23 papers chosen by
Tommaso Reggiani
Universita' di Bologna

  3. Health Effects on Children's Willingness to Compete By Björn Bartling; Ernst Fehr; Daniel Schunk
  4. Do Women Prefer a Co-operative Work Environment? By Peter Kuhn; Marie-Claire Villeval
  5. Estimating the returns to educational mismatch with panel data: the role of unobserved heterogeneity By Marco PECORARO
  6. Intelligence, Self-confidence and Entrepreneurship By Asoni, Andrea
  7. Career Concerns with Coarse Information By Alessandro Bonatti; Johannes Horner
  8. Disease and Development: The Role of Human Capital By Rodolfo Manuelli
  9. Regional Growth and Convergence: The Role of Human Capital in the Portuguese Regions By Catarina Cardoso; Eric J. Pentecost
  10. What Explains Schooling Differences Across Countries? By Juan Carlos Cordoba; Marla Ripoll
  11. Measuring the Stock of Human Capital for Comparative Analysis: An Application of the Lifetime Income Approach to Selected Countries By Gang Liu
  12. Labour Market Under-Utilisation of Recent Higher Education Graduates: New Australian Panel Evidence By Carroll, David; Tani, Massimiliano
  13. The Effect of Financial Incentives and Task-specific Cognitive Abilities on Task Performance By Ondrej Rydval
  14. Sources of Lifetime Inequality By Mark Huggett; Gustavo Ventura; Amir Yaron
  15. Low workforce participation of educated female and the role of work organizations in post-war Sri Lanka By Dissanayake, Kumudinei
  16. Time to Work or Time to Play: The Effect of Student Employment on Homework, Sleep, and Screen Time By Charlene Marie Kalenkoski; Sabrina Wulff Pabilonia
  17. Teaching Practices and Social Capital By Algan, Yann; Cahuc, Pierre; Shleifer, Andrei
  18. Teachers' Pay and Pupil Performance By Peter Dolton; Oscar Marcenaro Gutierrez
  19. Optimal Coexistence of Long-term and Short-term contracts in Labor Markets By Inés Macho-Stadler; David Pérez-Castrillo; Nicolás Porteiro
  20. The Effects of Tax Salience and Tax Experience on Individual Work Efforts in a Framed Field Experiment By Fochmann, Martin; Weimann, Joachim
  21. Not All Scientists pay to be Scientists: By Henry Sauermann; Michael Roach
  22. Performance Feedback, Firm Resources, and Strategic Change By Thorsten Grohsjean; Tobias Kretschmer; Nils Stieglitz
  23. Why Taxing Executives' Bonuses Fosters Risk-taking Behavior By Martin Grossmann; Markus Lang; Helmut Dietl

    Date: 2011
    Date: 2011
  3. By: Björn Bartling (University of Zurich, Department of Economics); Ernst Fehr (University of Zurich, Department of Economics); Daniel Schunk (University of Zurich and University of Mainz, Department of Economics)
    Abstract: The formation of human capital is important for a society's welfare and economic success. Recent literature shows that child health can provide an important explanation for disparities in children's human capital development across different socio-economic groups. While this literature focuses on cognitive skills as determinants of human capital, it neglects non-cognitive skills. We analyze data from economic experiments with preschoolers and their mothers to investigate whether child health can explain developmental gaps in children’s non-cognitive skills. Our measure for children's noncognitive skills is their willingness to compete with others. Our findings suggest that health problems are negatively related to children's willingness to compete and that the effect of health on competitiveness differs with socio-economic background. Health has a strongly negative effect in our sub-sample with low socioeconomic background, whereas there is no effect in our sub-sample with high socio-economic background.
    Keywords: willingness to compete, non-cognitive skills, human capital, health, household survey studies
    JEL: C90 I10 J24
    Date: 2011–05
  4. By: Peter Kuhn (Department of Economics, University of California, Santa Barbara, 2127 North Hall, Santa Barbara, CA 93106-9210); Marie-Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: Are women disproportionately attracted to work environments where cooperation rather than competition is rewarded ? This paper reports the results of a real-effort experiment in which participants choose between an individual compensation scheme and a team-based payment scheme. We find that women are more likely than men to select team-based compensation in our baseline treatment, but women and men join teams with equal frequency when we add an efficiency advantage to team production. Using a simple structural discrete choice framework to reconcile these facts, we show that three elements can account for the observed patterns in the team-entry gender gap : (1) a gender gap in confidence in others (i.e. women are less pessimistic about their prospective teammates’ relative ability), (2) a greater responsiveness among men to instrumental reasons for joining teams, and (3) a greater “pure” preference for working in a team environment among women.
    Keywords: gender, cooperation, self-selection, confidence, experiment
    JEL: C91 J16 J24 J31 M5
    Date: 2011
  5. By: Marco PECORARO (SFM, Université de Neuchâtel and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: Using longitudinal data from the Swiss Household Panel, this analysis suggests that the cross-sectional estimates of the returns to educational mismatch are significantly biased when unobserved heterogeneity is omitted in the wage equation. The results of the standard fixed effects model indeed demonstrate that the wage returns to education are independent of the job requirements. Hence, this empirical analysis supports the human capital interpretation of the Swiss labour market.
    Keywords: Educational mismatch, wages, panel data analysis, human capital
    Date: 2011–06–20
  6. By: Asoni, Andrea (Research Institute of Industrial Economics (IFN))
    Abstract: I investigate the effect of human capital on entrepreneurship using the National Longitudinal Survey of Youth - 1979. I find that individuals with higher measured intelligence and self-confidence are more likely to be entrepreneurs. Furthermore I present evidence suggesting that intelligence and self-confidence affect business ownership through two different channels: intelligence increases business survival while self-confidence increases business creation. Finally, once we control for intelligence and self-confidence the effect of formal college education almost completely vanishes. These results are robust to controlling for selection into entrepreneurship and selection into college.
    Keywords: Entrepreneurship; College Education; Intelligence; Self-confidence
    JEL: C41 J24 L26
    Date: 2011–10–24
  7. By: Alessandro Bonatti (MIT, Sloan School of Management); Johannes Horner (Cowles Foundation, Yale University)
    Abstract: This paper develops a model of career concerns. The worker's skill is revealed through output, and wage is based on expected output, and so on assessed ability. Specifically, work increases the probability that a skilled worker achieves a one-time breakthrough. Effort levels at different times are strategic substitutes. Effort (and, if marginal cost is convex, wage) is single-peaked with seniority. The agent works too little, too late. Both delay and underprovision of effort worsen if effort is observable. If the firm commits to wages but faces competition, the optimal contract features piecewise constant wages as well as severance pay.
    Keywords: Career concerns, Experimentation, Career paths, Up-or-out, Reputation
    JEL: D82 D83 M52
    Date: 2011–10
  8. By: Rodolfo Manuelli (Department of Economics, Washington University in St. Louis and Federal Reserve Bank of St. Louis)
    Abstract: This paper presents a model of human capital accumulation that allows for feedback effects between the consequences and the likelihood of suffering from particular diseases and the decisions to invest in knowledge, both in the form of schooling and on-the-job training. I use a calibrated version of the model to estimate the long run impact of eradicating HIV/AIDS and malaria for a number of Sub- Saharan African countries. I find that the effect on output per worker can be substantial.
    Date: 2011–06
  9. By: Catarina Cardoso (School of Business and Economics, Loughborough University, UK); Eric J. Pentecost (School of Business and Economics, Loughborough University, UK)
    Abstract: Potentially one of the most important determinants of regional economic growth and convergence is human capital, although due to a lack of data this factor is frequently omitted from econometric studies. In contrast, this paper constructs three measures of human capital at the NUTS III regional level for Portugal for the period 1991-2008 and then includes these variables in regional growth regressions. The results show that both secondary and higher levels of education have a significant positive effect on regional growth rates which may be regarded as supportive of Portuguese education policy, which over the last three decades has attempted to raise the regional human capital by locating higher education institutions across the country.
    Keywords: Human capital, Regional convergence, GMM
    JEL: C23 I21 O18 R11
    Date: 2011–09
  10. By: Juan Carlos Cordoba (Iowa State University); Marla Ripoll (University of Pittsburgh)
    Abstract: This paper provides a theory that explains the cross-country distribution of average years of schooling, as well as the so called human capital premium puzzle. In our theory, credit frictions as well as differences in access to public education, fertility and mortality turn out to be the key reasons why schooling differs across countries. Differences in growth rates and in wages are second order.
    Keywords: human capital, per capita income differences, life expectancy, public education spending, life cycle model
    JEL: I22 J24 O11
    Date: 2011–05
  11. By: Gang Liu
    Abstract: This paper summarizes the outcomes of the first phase of the OECD human capital project. In so doing, it shows the feasibility of applying the lifetime income approach to measuring human capital for comparative analysis, both across countries and over time. It also highlights the feasibility of applying the methodology to the categorical data (i.e. by 5-year or 10-year age group) that are typically available within the OECD statistics system, rather than to data by single year of age required by the original Jorgenson- Fraumeni methodology. The results in this paper indicate that the estimated value of human capital is substantially larger than that of traditional physical capital. Ratios of human capital to GDP are in a range from around eight to over ten across countries, broadly in line with those reported in a number of national studies. The distributions of human capital by age, gender, and education show that men dominate women in terms of their human capital holdings. In addition, people with higher education are better off than those with lower education, and the same is true for younger people compared to their older counterparts, although the detailed patterns vary across countries. Decomposition analysis of changes in the volume of human capital demonstrates that changes in population structure between men and women had little effect on the change of human capital per capita. While in all countries higher educational attainment contributed positively to the change of human capital per capita, this is not always sufficient to offset the negative effect of population ageing; as a result, the volume of human capital per capita appeared to have declined in some countries over the observed period. Finally, sensitivity analysis confirms that estimates of the value of human capital depend on the choice of the two key parameters, i.e. annual real income growth rate and discount rate, while within-country distribution of human capital and trends of the volume of human capital are less sensitive to these assumptions.<BR>Ce document de travail fait la synthèse des résultats de la première phase du projet de l’OCDE consacré au capital humain. Il démontre notamment qu’il est possible d’appliquer l’approche en terme de revenus actualisés le long du cycle de vie à la mesure du capital humain à des fins d’analyse comparative, à la fois entre les pays et dans le temps. Le document souligne également que cette méthodologie peut aussi être appliquée à des données catégoriels (c’est-à-dire par classe d’âge de 5 ou 10 ans), généralement disponibles dans le système statistique de l’OCDE, plutôt qu’aux données continues par âge, requises par la méthode Jorgenson-Fraumeni. Les résultats présentés dans ce rapport montrent que la valeur estimée du capital humain est bien plus importante que celle du capital physique traditionnel. Le rapport capital humain/sur PIB s’inscrit dans une fourchette comprise entre huit et dix dans les différents pays, ce qui est globalement conforme aux chiffres rapportés par un certain nombre d’études nationales. La répartition du capital humain en fonction de l’âge, du sexe et du niveau d’instruction montre que les hommes surpassent les femmes en termes de stock de capital humain. Par ailleurs, les individus les plus instruits tirent davantage leur épingle du jeu que les personnes moins qualifiées et les jeunes ont un capital humain supérieur à celui des personnes plus âgées, bien que dans le détail les schémas varient d’un pays à l’autre. L’évolution des volumes de capital humain montre que l’évolution démographique entre hommes et femmes n’a eu finalement qu’un impact limité sur la variation du capital humain par habitant. Si, dans tous les pays, l’amélioration du niveau d’instruction a contribué à l’augmentation du capital humain par habitant, cela n’a pas toujours été suffisant pour compenser les conséquences du vieillissement de la population, entraînant une baisse des volumes de capital humain par habitant dans certains pays. Enfin, l’analyse de sensibilité confirme que les estimations des valeurs du capital humain dépendent du choix de deux paramètres, à savoir le taux de croissance annuel du revenu réel et le taux d’actualisation. Mais la répartition du capital humain et l’évolution des volumes de capital humain dans chaque pays sont moins sensibles à ces paramètres.
    Date: 2011–10–10
  12. By: Carroll, David (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney)
    Abstract: Recent research into the Australian labour market has reported that a substantial proportion of the tertiary-educated labour force is under-utilised relative to their level of education, echoing findings from an expanding international literature. This paper uses recent panel data from the 2010 Beyond Graduation Survey to analyse the incidence of labour force under-utilisation amongst recent Australian graduates and its effect on their wages, with an under-utilised graduate defined as a one who is in a job for which a sub-degree qualification would suffice. We find that 26% of graduates were under-utilised immediately after course completion and 15% were under-utilised three years later, although this varied considerably between subgroups. Recent graduates were much more likely to remain under-utilised than become under-utilised later in their careers. Being under-utilised appears to affect the earnings of different graduate age groups in different ways. Controlling for unobserved heterogeneity, we find that younger graduates tend to earn the same mean wages regardless of whether or not they are under-utilised, while older under-utilised bachelor degree graduates are at a significant wage disadvantage relative to their peers. This is suggestive of a graduate skills surplus and, by extension, inefficient public and individual investment in human capital.
    Keywords: graduate labour market, human capital, panel data
    JEL: I23 J24
    Date: 2011–10
  13. By: Ondrej Rydval (Max Planck Institute of Economics, Jena)
    Abstract: We extend evidence on the interaction between financial incentives and cognitive abilities by focusing on the effect of task-specific abilities. In a memory-intensive task situated in an accounting context, the effect of accounting education on performance is stronger under financial incentives as compared to flat rate pay. Subjects with more accounting education respond stronger to financial incentives. Hence using incentives efficiently may involve targeting them at high-ability individuals. More generally, taking into account the incentive-ability interaction seems important when interpreting observed behavior in cognitively demanding lab and field economic environments.
    Keywords: Financial incentives, Cognitive ability, Performance, Experiment
    JEL: C81 C91 C93 D83
    Date: 2011–11–03
  14. By: Mark Huggett (Georgetown University); Gustavo Ventura (University of Iowa); Amir Yaron (The Wharton School, University of Pennsylvania)
    Abstract: Is lifetime inequality mainly due to differences across people established early in life or to differences in luck experienced over the working lifetime? We answer this question within a model that features idiosyncratic shocks to human capital, estimated directly from data, as well as heterogeneity in ability to learn, initial human capital, and initial wealth. We find that, as of age 23, differences in initial conditions account for more of the variation in lifetime earnings, lifetime wealth and lifetime utility than do differences in shocks received over the working lifetime.
    Keywords: Lifetime Inequality, Human Capital, Idiosyncratic Risk
    JEL: E21 D3 D91
    Date: 2010–11
  15. By: Dissanayake, Kumudinei
    Abstract: Sri Lanka as a developing economy that achieved gender equity in education and a higher literacy rate (both adult and youth) in the South Asian region still records a low labor force participation and high unemployment rate of females when compared to their male counterparts. With the suggestion of existing literature on the non-conventional models of careers those adopted by young and female populations at the working age, this paper discusses the role of work organizations in absorbing more females (and even minority groups) into the workforce. It mainly focuses on the need of designing appropriate human resource strategies and reforming the existing organizational structures in order for contributing to the national development in the post-war Sri Lanka economy.
    Keywords: Sri Lanka, Female labor, Labor market, Labor policy, Work force, Female, Educated, Work organization, Role, Non-conventional models of career
    JEL: J21
    Date: 2011–09
  16. By: Charlene Marie Kalenkoski (Ohio University); Sabrina Wulff Pabilonia (U.S. Bureau of Labor Statistics)
    Abstract: We use detailed time-diary information on high school students’ daily activities from the 2003–2008 American Time Use Surveys (ATUS) to investigate the effects of employment on the time a student spends on homework and other major activities. Time-diary data are more detailed and accurate than data derived from responses to “usual activity” survey questions underlying other analyses and capture the immediate effects of working that may well accumulate over time to affect future outcomes. Our results suggest that employment decreases the time that high school students spend on homework, which is human-capital building, on all days, but also decreases screen time on non-school days, which may be considered unproductive time. Employed teens get more than the recommended amount of sleep on school days, and only slightly less on non-school days.
    Keywords: teenagers, employment, high school, time allocation
    JEL: J13 J22 J24
    Date: 2011–10
  17. By: Algan, Yann (Sciences Po, Paris); Cahuc, Pierre (Ecole Polytechnique, Paris); Shleifer, Andrei (Harvard University)
    Abstract: We use several data sets to consider the effect of teaching practices on student beliefs, as well as on organization of firms and institutions. In cross-country data, we show that teaching practices (such as copying from the board versus working on projects together) are strongly related to various dimensions of social capital, from beliefs in cooperation to institutional outcomes. We then use micro-data to investigate the influence of teaching practices on student beliefs about cooperation and students' involvement in civic life. A two-stage least square strategy provides evidence that teaching practices have an independent sizeable effect on student social capital. The relationship between teaching practices and student test performance is nonlinear. The evidence supports the idea that progressive education promotes social capital.
    Keywords: education, social capital, institutions
    JEL: I2 Z1
    Date: 2011–10
  18. By: Peter Dolton; Oscar Marcenaro Gutierrez
    Abstract: If you pay peanuts, do you get monkeys? If teachers were better paid and higher up the national income distribution, would there be an improvement in pupil performance? Peter Dolton and Oscar Marcenaro-Gutierrez examine the enormous variation in teachers' pay across OECD countries and its significance for educational outcomes.
    Keywords: incentive systems, merit pay, education, teacher salaries, pupil outcome
    Date: 2011–10
  19. By: Inés Macho-Stadler (Department of Economics, Universitat Autònoma de Barcelona); David Pérez-Castrillo (Department of Economics, Universitat Autònoma de Barcelona); Nicolás Porteiro (Department of Economics, Universidad Pablo de Olavide)
    Abstract: We consider a market where firms hire workers to run their projects and such projects differ in profitability. At any period, each firm needs two workers to successfully run its project: a junior agent, with no specific skills, and a senior worker, whose effort is not verifiable. Senior workers differ in ability and their competence is revealed after they have worked as juniors in the market. We study the length of the contractual relationships between firms and workers in an environment where the matching between firms and workers is the result of market interaction. We show that, despite in a one-firm-one-worker set-up long-term contracts are the optimal choice for firms, market forces often induce firms to use short-term contracts. Unless the market only consists of firms with very profitable projects, firms operating highly profitable projects offer short-term contracts to ensure the service of high-ability workers and those with less lucrative projects also use short-term contracts to save on the junior workers' wage. Intermediate firms may (or may not) hire workers through long-term contracts.
    Keywords: Labor contracts, short-term, long-term, matching, incentives.
    JEL: D86 C78
    Date: 2011–11
  20. By: Fochmann, Martin (University of Magdeburg); Weimann, Joachim (University of Magdeburg)
    Abstract: We conduct a framed field experiment with 245 employed persons (no students) as subjects and a real tax, which is levied on the subjects' income from working in our real effort task. In our first three treatments, the net wage is constant but gross wages are subject to different constant marginal tax rates (0, 25%, 50%). It turns out that the effort is significantly higher under the tax than in the no tax treatment. Subjects perceive a too high net wage because they underestimate the tax. We conjecture that tax perception depends on the tax rate, the presentation of the tax and the experience subjects have with taxation. These conjectures are confirmed in four further treatments employing a direct and an indirect progressive tax scale. It turns out that simple at taxes are particularly prone to being misperceived because their simplicity reduces the tax salience.
    Keywords: field experiment, real effort experiment, tax perception, tax salience, tax experience, behavioral economics
    JEL: C91 D14 H24
    Date: 2011–10
  21. By: Henry Sauermann; Michael Roach
    Abstract: A growing body of research on firms’ “open science” strategies rests on the notion that scientists have a strong preference for publishing and that firms are able to extract a wage discount if they allow scientists to publish. Drawing on a survey of 1,400 life scientists about to enter the job market, we suggest an alternative view. First, we show significant heterogeneity in the price scientists assign to the opportunity to publish in firms, and those scientists who seek industry careers have particularly low preferences for publishing. Thus, many job applicants are not willing to accept lower wages for jobs that let them publish and firms pursuing open science strategies may instead have to pay publishing incentives that fulfill both sorting and incentive functions. Second, we show that scientists with higher ability have a higher price of publishing but also expect to be paid higher wages regardless of the publishing regime. Thus, they are not cheaper to hire than other scientists if allowed to publish, but they are more expensive if publishing is restricted. Finally, we show that scientists publish not simply for “peer recognition” but also for more specific reasons, including the opportunity to advance science or to move to higher-paying jobs. Different reasons predict what price a scientist assigns to the opportunity to publish and may also have very different implications for the sustainability of competitive advantages derived from open science strategies.
    Keywords: Scientists; publishing; competitive advantage
    JEL: O31 L82
    Date: 2011
  22. By: Thorsten Grohsjean; Tobias Kretschmer; Nils Stieglitz
    Abstract: Combining insights from the behavioral theory of the firm and the resource-based view we investigate the antecedents of strategic change in fast-changing environments. We hypothesize the independent and joint effects of performance feedback and of flexible and specific resources on strategic change. Using an unbalanced panel of 493 publisher-year observations we find that negative performance feedback triggers more strategic change. Further, while flexible resources have no direct influence on strategic change they weaken the negative relationship between performance feedback and strategic change. Finally, we find that larger stocks of specific resources lead to less strategic change.
    Keywords: Performance feedback; strategic change; resource-based-view; video game industry
    JEL: L21 L82
    Date: 2011
  23. By: Martin Grossmann (Institute for Strategy and Business Economics, University of Zurich); Markus Lang (Institute for Strategy and Business Economics, University of Zurich); Helmut Dietl (Institute for Strategy and Business Economics, University of Zurich)
    Abstract: Bonus taxes have been implemented to prevent managers from excessive risk-taking. This paper analyzes the effects of taxing executives' bonuses in a principal-agent model. Our model shows that unintentionally the introduction of a bonus tax intensifies the manager's risk-taking behavior and decreases the manager's effort. The principal responds to a bonus tax by offering the manager a higher fixed salary but a lower incentive-based salary.
    Keywords: Principal-agent model, bonus tax, risk-taking, executive compensation, financial regulation
    JEL: H24 J30 M52
    Date: 2011–10

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.