nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒01‒25
sixteen papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. How Acid are Lemons? Adverse Selection and Signalling for Skilled Labour Market Entrants By Robert Wagner; Thomas Zwick
  2. How Unjust! An Experimental Investigation of Supervisors' Evaluation Errors and Agents' Incentives By Marchegiani, Lucia; Reggiani, Tommaso; Rizzolli, Matteo
  3. The Role of Human Capital in the Process of Economic Development: The Case of England, 1307-1900 By Alexandra M. de Pleijt
  4. Labor effort and temporary jobs: evidence for Italy By Massimo Mancini
  5. Does Linking Worker Pay to Firm Performance Help the Best Firms Do Even Better? By Douglas L. Kruse; Joseph R. Blasi; Richard B. Freeman
  6. The Effect of Relative Standing on Considerations about Self-employment By Stefan Schneck
  7. Hours of Work and Retirement Behavior By Machado, C. Sofia; Portela, Miguel
  8. Labour Productivity and human capital in the maritime sector of the North Atlantic, c. 1672-1815 By Jelle van Lottum; Jan Luiten van Zanden
  9. Work Hours Constraints and Health By David Bell; Steffen Otterbach; Alfonso Sousa-Poza
  10. Quality of Work Experience and Economic Development—Estimates using Canadian Immigrant Data By Serge Coulombe; Gilles Grenier; Serge Nadeau
  11. Transmission of Human Capital across Four Generations: Intergenerational Correlations and a Test of the Becker-Tomes Model By Lindahl, Mikael; Palme, Mårten; Sandgren Massih, Sofia; Sjögren, Anna
  12. Men too sometimes shy away from competition: The case of team competition By Dargnies, Marie-Pierre
  13. Innovation and Education: Is there a ‘Nerd Effect’? By Goldbach, Stefan
  14. Average Wage, Qualification of the Workforce and Export Performance in German Enterprises: Evidence from KombiFiD Data By Wagner, Joachim
  15. Investments in the Human Capital of the Socially Disadvantaged Children - Effects on Redistribution By Tim Lohse; Peter F. Lutz; Christian Thomann
  16. Decentralised bargaining and performance related pay: new evidence from a panel of Italian firms By Mirella Damiani; Andrea Ricci

  1. By: Robert Wagner (Ludwig-Maximilians University, Munich); Thomas Zwick (Ludwig-Maximilians University, Munich and Centre for European Economic Research, Mannheim)
    Abstract: This paper jointly analyses the consequences of adverse selection and signalling on entry wages of skilled employees. It uses German linked employer employee panel data (LIAB) and introduces a measure for relative productivity of skilled job applicants based on apprenticeship wages. It shows that post-apprenticeship employer changers are a negative selection from the training firms’ point of view. Negative selection leads to lower average wages of employer changers in the first skilled job than stayers. Entry wages of employer changers are specifically reduced by high occupation and training firm retention rates. Additional training firm signals are high apprenticeship wages that a positive selection of apprenticeship applicants, works councils and firm size that increase training quality. Finally, positive individual signals such as schooling background affect the skilled entry wages of employer changers positively.
    Keywords: entry wages, employer change, adverse selection, signalling
    JEL: J24 J31 J62 J63 M52 M53
    Date: 2012–01
  2. By: Marchegiani, Lucia (University of Rome 3); Reggiani, Tommaso (University of Bologna); Rizzolli, Matteo (Free University of Bozen/Bolzano)
    Abstract: In our simple model the supervisor: i) cannot observe the agent's effort; ii) aims at inducing the agent to exert high effort; but iii) can only offer rewards based on performance. Since performance is only stochastically related to effort, evaluation errors may occur. In particular, deserving agents that have exerted high effort may not be rewarded (Type I errors) and undeserving agents that have exerted low effort may be rewarded (Type II errors). We show that, although the model predicts both errors to be equally detrimental to performance, this prediction fails with a lab experiment. In fact, failing to reward deserving agents is significantly more detrimental than rewarding undeserving agents. We discuss our result in the light of some economic and managerial theories of behavior. Our result may have interesting implications for strategic human resource management and personnel economics and may also contribute to the debate about incentives and organizational performance.
    Keywords: agency theory, organizational justice, compensation, type I and type II errors, real effort
    JEL: C91 M50 J50
    Date: 2011–12
  3. By: Alexandra M. de Pleijt
    Abstract: Macroeconomic growth models underline the importance of human capital in the process of economic development. This analysis introduces a new proxy for human capital, which is educational attainment, and examines cohesion between education levels and growth for England between 1307 and 1900. The empirical evidence suggests no significant result between basic skills, such as reading and writing abilities, and growth of per capita GDP. More progressive human capital levels, as measured by average years of higher education, seem to have contributed to the process of development until the mid-eighteenth century.
    Keywords: Economic development, human capital, history of education, England
    Date: 2011–12
  4. By: Massimo Mancini
    Abstract: The aim of this study is to investigate the incentive role of different type of contract. The hypothesis to be tested is that the probability of exerting effort is higher for temporary workers than for permanent ones, using indicators known in literature (unpaid overtime hours and absenteeism for illness and family reasons). Data are taken from Italian Labour Force Survey. Preliminary results show that temporary workers provide more effort only with regard to absence, but not with regard to unpaid overtime work.
    Date: 2011–10–01
  5. By: Douglas L. Kruse; Joseph R. Blasi; Richard B. Freeman
    Abstract: This paper analyzes the linkages among group incentive methods of compensation, labor practices, worker assessments of workplace culture, turnover, and firm performance in a non-representative sample of companies: firms that applied to the “100 Best Companies to Work For in America” competition from 2005 to 2007. Although employers with good labor practices self- select into the 100 Best Companies firms sample, which should bias the analysis against finding strong associations among modes of compensation, labor policies, and outcomes, we find that in the firms that make more extensive use of group incentive pay employees participate more in decisions, have greater information sharing, trust supervisors more, and report a more positive workplace culture than in other companies. The combination of group incentive pay with policies that empower employees and create a positive workplace culture reduces voluntary turnover and increases employee intent to stay and raises return on equity. Finding these effects in the non-representative “100 Best Companies” sample strengthens the likelihood that the policies have a causal impact on employee well-being and firm performance.
    JEL: J33 J53 J54 J63 M50 M52 M54 P12 P13 P17
    Date: 2012–01
  6. By: Stefan Schneck
    Abstract: This paper uses unique German data to examine the effects of the relative standing on the individual propensity to become self-employed in the next two years. The results suggest that the relationship between relative wage positions and propensity to become self-employed is U-shaped. This is interpreted as evidence that low status translates into entrepreneurial motivation for workers in low relative wage positions. Employees with high relative standing, in turn, seem to be more concerned about the lack of future career prospects in paid employment and consider self-employment as a next step on the individual career ladder.
    Keywords: Relative wage position, status, self-employment
    JEL: L26 L29
    Date: 2011
  7. By: Machado, C. Sofia (Instituto Politécnico do Cávado e do Ave); Portela, Miguel (University of Minho)
    Abstract: Using a novel dataset from the 2006 Portuguese Labor Force Survey this paper examines the impact of a voluntary reduction in hours of work, before retirement, on the moment of exit from the labor force. If, as often suggested, flexibility in hours of work is a useful measure to postpone retirement, then a reduction in working hours should be associated with retirement at later ages. Results prove otherwise suggesting that reducing hours of work before retirement is associated with early exits from the labor force. A reduction in hours of work seems to signal the worker's wish to retire sooner rather than to announce the desire of remaining in the labor market. This result may enclose the need for some alternative policy strategies regarding working hours.
    Keywords: aging, retirement, working hours, older workers
    JEL: J14 J26 J22 J21
    Date: 2012–01
  8. By: Jelle van Lottum; Jan Luiten van Zanden
    Abstract: Pre-modern growth was to a large extent dependent on processes of commercialization and specialization, based on cheap transport. Seminal interpretations of the process of economic growth before the Industrial Revolution have pointed to the strategic importance of the rise of the Atlantic economy and the growth of cities linked to this but have not really explained why Europeans were so efficient in organizing large international networks of shipping and trade. Most studies concerning early modern shipping have focused on changes in shipdesign in explaining long-term performance of European shipping in the pre-1800 period. In this paper we argue that this is only part of the explanation. Human capital – the quality of the labour force employed on ships – mattered as well. We firstly demonstrate that levels of human capital on board European ships were very high, much higher than the average for the countries from which the crew was recruited, and secondly that there were close links between the level of labour productivity in shipping and the quality of the workforce. This suggests strongly that shipping was a ‘high tech’ industry not only employing high quality capital goods, but also, as a complementary input, high quality labour, which was required to operate the increasingly complex ships and their equipment.
    Keywords: Human Capital, Shipping, Early Modern Period
    Date: 2011–12
  9. By: David Bell; Steffen Otterbach; Alfonso Sousa-Poza
    Abstract: The issue of whether employees who work more hours than they want to suffer adverse health consequences is important not only at the individual level but also for governmental formation of work time policy. Our study investigates this question by analyzing the impact of the discrepancy between actual and desired work hours on self-perceived health outcomes in Germany and the United Kingdom. Based on nationally representative longitudinal data, our results show that work-hour mismatches (i.e., differences between actual and desired hours) have negative effects on workers´ health. In particular, we show that "overemployment" - working more hours than desired - has negative effects on different measures of self-perceived health.
    Keywords: Work time, hours constraints, health, Germany, United Kingdom
    JEL: I10 J21 J22
    Date: 2011
  10. By: Serge Coulombe (Department of Economics, University of Ottawa, Ottawa, ON); Gilles Grenier (Department of Economics, University of Ottawa, Ottawa, ON); Serge Nadeau (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: There is increasing evidence in the economic development literature that the quality of schooling considerably varies across countries that are at different stages in their economic development. However, an issue that has been overlooked is the role of the quality of work experience in explaining differences in economic development. This paper uses Canadian census data on immigrant earnings to show that per capita GDP in the country of origin can be used as a quality indicator for both education and work experience. Coefficients estimated from immigrant earnings regressions are then used to estimate the effects of difference in human capital quality on development gaps between rich and poor countries. The analysis shows that while differences in the quality of schooling account for substantial differences in living standards across countries, differences in the quality of work experience can account for even more. Policywise, our results suggest that the immediate effects of improving the quality and the quantity of schooling in less-developed countries might be rather limited if labour-market institutions and ways of doing things are not changed at the same time to improve the quality of work experience.
    Keywords: Quality of human capital, work experience, immigrant earnings, quality of schooling, economic development.
    JEL: O15 J61 J24 O47 O57
    Date: 2011
  11. By: Lindahl, Mikael (Dept. of Economics, Uppsala University, CESifo, IFAU, IZA and UCLS); Palme, Mårten (Dept. of Economics, Stockholm University); Sandgren Massih, Sofia (Dept. of Economics, Uppsala University); Sjögren, Anna (IFAU and SOFI Stockholm University)
    Abstract: Most previous studies on intergenerational transmission of human capital are restricted to two generations - between the parent and the child generation. In this paper we investigate if there is an independent effect of the grandparent and the great grandparent generations in this process. We use a dataset where we are able to link individual measures of life time earnings for three generation and data on educational attainments of four generations. We first do conventional regressions and transition matrices for life time earnings measures and educational attainments adding variables for the grandparent and great grandparent generations, respectively. We find that grandparents and even great grandparents significantly influence earnings and education. We then estimate the so called Becker-Tomes model using the educational attainment of the great grandparent generation as an instrumental variable. We fail to find support for the model’s predictions.
    Keywords: Intergenerational income mobility; earnings distribution; income inequality
    JEL: D31 J62
    Date: 2011–12–18
  12. By: Dargnies, Marie-Pierre
    Abstract: Recent results in experimental and personnel economics indicate that women do not like competitive environments as much as men. This article presents an experimental design giving participants the opportunity to enter a tournament as part of a team rather than alone. While a large and significant gender gap in entry in the individual tournament is found in line with the literature, no gender gap is found in entry in the team tournament. Women do not enter the tournament significantly more often when it is team-based but men enter significantly less when they are part of a team rather than alone. The main reason for men's disaffection for the team competition appears to be linked to the uncertainty on their teammate's ability. More precisely, high-performing men fear to be the victims of the free-riding behaviour of their teammate. --
    Keywords: Teams,Gender Gap,Tournament
    Date: 2011
  13. By: Goldbach, Stefan
    Abstract: This paper investigates whether entrepreneurs with technical education are more innovative in high-tech industries than economists. The main contribution to the literature is in using the type of education as main explanatory variable for innovation. To analyze this question, the KfW/ZEW Start-Up Panel between 2005 and 2007 is used. Two independent OLS regressions are conducted for entrepreneurs with university degree and practical education. The results suggest that education matters for individuals with a university degree in high-tech industries but not for people with practical education. Having an economics degree is correlated with higher innovativeness. Therefore, for the underlying sample we do not find a ‘nerd effect’. The results depend on the underlying definition of innovation, as robustness checks show.
    Keywords: entrepreneurship, innovation, education
    Date: 2012–01–11
  14. By: Wagner, Joachim (Leuphana University Lüneburg)
    Abstract: Empirical investigations with enterprise level data from official statistics often use the average wage as a proxy variable for the qualification of the workforce, mostly due to the lack of detailed information on the qualification of the employees. This paper uses unique newly available data for German enterprises from the KombiFiD project that for the first time combine information from the statistics of employees covered by social security and information from surveys performed by the Statistical Offices to look at the quality of this proxy variable by investigating the link between the average wage in a firm and the qualification of the workforce. Furthermore, it demonstrates that detailed information on the qualification of the workforce sheds new light on the role of highly qualified employees for success on export markets that is not revealed by the average wage as a proxy variable. Based on the results of this paper it is argued that combined firm level data that stem from different data producers should be widely accessible for research.
    Keywords: qualification of workforce, average wage, export, firm level data
    JEL: C81 F14 J31
    Date: 2012–01
  15. By: Tim Lohse; Peter F. Lutz; Christian Thomann
    Abstract: Recently, early investments in the human capital of children from socially disadvantaged environments have attracted a great deal of attention. Programs of such early intervention are spreading considerably in the U.S. and are currently tested in several European countries. In a discrete version of the Mirrlees model with a parents' and a children's generation we show the intra-generational and the inter-generational redistributional consequences of such intervention programs. It turns out that the parents' generation always loses when such intervention programs are implemented. Among the children's generation it is the rich who always benefit. Despite the expectation that early intervention puts the poor descendants in a better position, our analysis reveals that the poor among the children's generation may even be worse off if the effect of early intervention on their productivity is not large enough.
    Keywords: Early Intervention, Welfare, Redistribution, Taxation
    JEL: J13 H21 I14
    Date: 2011–10
  16. By: Mirella Damiani; Andrea Ricci
    Abstract: Purpose: This paper examines two institutional aspects closely related: (i) the extent to which collective bargaining has been decentralized at firm or district level; (ii) the extent to which, at this level of bargaining, Performance Related Pay (PRP) have been used. Design/methodology/approach: On the basis of a unique database, which contains recent information on nationwide sample of firms, panel estimates aimed at identifying the main factors which have favoured the adoption of the second level of bargaining and PRP are presented. Findings. unions, after size, is the main factor associated to the probability of the second level of bargaining and PRP. Significant estimates are also found for training. Research limitations/implications – Further research based on additional data should enable us to identify causal effects. Practical implications: It offers new evidence to evaluate ongoing reform proposals to implement firm-level agreements more tailored to firms’ specific needs. Originality/value our estimates are based on a unique dataset which contains recent information and a nationwide sample of firms, representative of the whole Italian economy (other studies on Italy are more limited in scope, since they focus on specific sectors or regions). Second, it addresses the question of training, an aspect so far not examined in relation to PRP in Italy.
    Keywords: Performance–related pay, unions
    JEL: J33 J51
    Date: 2011–11–01

This nep-hrm issue is ©2012 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.