nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒02‒01
fifteen papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Human Capital in Cities and Suburbs By Stolarick, Kevin; Mellander, Charlotta; Florida, Richard
  2. Work Values in Western and Eastern Europe By Benno Torgler
  3. A Weekly Diary Study on the Buffering Role of Social Support in the Relationship between Job Insecurity and Employee Performance By Schreurs, Bert; van Emmerik, IJ. Hetty; Guenter, Hannes; Germeys, Filip
  4. The effect of endogenous human capital accumulation on optimal taxation By William B. Peterman
  5. Job Separations, Job loss and Informality in the Russian Labor Market By Hartmut Lehmann; Tiziano Razzolini; Anzelika Zaiceva
  6. Respect and relational contracts By Tor Eriksson; Marie-Claire Villeval
  7. Some unpleasant general equilibrium implications of executive incentive compensation contracts By John B. Donaldson; Natalia Gershun; Marc P. Giannoni
  8. Mortality transition and differential incentives for early retirement By Hippolyte D'Albis; Paul Lau Sau-Him; Miguel Sanchez-Romero
  9. On the (non) existence of a price equilibrium in delegation games with relative performance compensation By M. Kopel; L. Lambertini
  10. The Inventive, the Educated, and the Creative: How Do They Affect Metropolitan Productivity? By Lobo, José; Mellander, Charlotta; Stolarick, Kevin; Strumsky, Deborah
  11. The Wages of Sinistrality: Handedness, Brain Structure and Human Capital Accumulation By Goodman, Joshua
  12. When does Impression Management Work: The Influence of Temporal Distance On Interviewer Evaluations By Proost, Karin; Germeys, Filip; Schreurs, Bert
  13. The human capital of Central-Eastern and Eastern Europe in European perspective By Jörg Baten; Mikolaj Szoltysek
  14. Incentives and the Effects of Publication Lags on Life Cycle Research Productivity in Economics By John P. Conley; Mario J. Crucini; Robert A. Driskill; Ali Sina Onder
  15. Extending the case for a beneficial brain drain By Simone Bertoli; Herbert Brücker

  1. By: Stolarick, Kevin (University of Toronto); Mellander, Charlotta (Jönköping International Business School); Florida, Richard (University of Toronto)
    Abstract: Research on human capital generally focuses on the regional level, and neglects the relative effects of its distribution between center cities and surrounding suburbs. This research examines the effects of this intra-metropolitan distribution on economic performance. The findings indicate that this distribution matters significantly to US regional performance. Suburban human capital matters more than center city human capital. However, this varies by regional size. Suburban human capital has the biggest effect on regional economic performance in smaller and medium size metros. Center city human capital has a relatively larger effect on economic performance in regions with over one million people.
    Keywords: Human Capital; Density; Intra-metropolitan distribution; Income; Housing prices
    JEL: J24 O30 R10 R20
    Date: 2012–01–20
  2. By: Benno Torgler (The School of Economics and Finance, Queensland University of Technology, research fellows of CREMA – Center for Research in Economics, Management and the Arts, Switzerland and associated with CESifo)
    Abstract: The paper reports on work values in Europe. At the country level we find that job satisfaction is related to lower working hours, higher well-being, and a higher GDP per capita. Moving to the micro level, we turn our attention from job satisfaction to analyse empirically work centrality and work value dimensions (without exploring empirically job satisfaction) related to intrinsic and extrinsic values, power and social elements. The results indicate substantial differences between Eastern and Western Europe. Socio-demographic factors, education, income, religiosity and religious denomination are significant influences. We find additional differences between Eastern and Western Europe regarding work-leisure and work-family centrality that could be driven by institutional conditions. Furthermore, hierarchical cluster analyses report further levels of dissimilarity among European countries.
    Keywords: Work Values, Job Satisfaction, Work-Leisure Relationship, Work-Family Centrality, Eastern Europe, Western Europe
    JEL: P20 D10 J28 J17 J22
    Date: 2011–12
  3. By: Schreurs, Bert (Maastricht University School of Business and Economics Department of Organization and Strategy, Maastricht, The Netherlands); van Emmerik, IJ. Hetty (Maastricht University School of Business and Economics Department of Organization and Strategy, Maastricht, The Netherlands); Guenter, Hannes (Maastricht University School of Business and Economics Department of Organization and Strategy, Maastricht, The Netherlands); Germeys, Filip (Hogeschool-Universiteit Brussel (HUB), Belgium)
    Abstract: In this article, the authors used a within-person design to examine the relationship between job insecurity and employee in-role and extra-role performance, and the buffering role of time-varying work-based support (i.e., supervisor and colleague support) in this relationship. Weekly diary data gathered over the course of three weeks from 56 employees confronted with organizational restructuring and analyzed with a hierarchical linear modeling approach showed that weekly fluctuations in job insecurity negatively predicted week-level in-role performance. As predicted, supervisor support moderated the intra-individual relationship between job insecurity and in-role performance, so that employees‘ in-role performance suffered less from feeling job insecurity during weeks in which they received more support from their supervisor. No relationship between job insecurity and extra-role performance was observed. This within-person study contributes to research on job insecurity that has primarily focused on inter-individual differences in job insecurity and their associations with job performance. Theoretical and practical implications for human resource management are discussed.
    Keywords: job insecurity; job demands; job stress; social support; uncertainty management
    Date: 2011–09
  4. By: William B. Peterman
    Abstract: This paper considers the impact of endogenous human capital accumulation on optimal tax policy in a life cycle model. Including endogenous human capital accumulation, either through learning-by-doing or learning-or-doing, is analytically shown to create a motive for the government to use age-dependent labor income taxes. If the government cannot condition taxes on age, then it is optimal to use a tax on capital in order to mimic such taxes. Quantitatively, introducing learning-by-doing or learning-or-doing increases the optimal tax on capital by forty or four percent, respectively. Overall, the optimal tax on capital is thirty five percent higher in the model with learning-by-doing compared to the model with learning-or-doing implying that how human capital accumulates is of significant importance when determining the optimal tax policy.
    Keywords: Capital ; Human capital ; Taxation
    Date: 2012
  5. By: Hartmut Lehmann; Tiziano Razzolini; Anzelika Zaiceva
    Abstract: Having unique data we investigate the link between job separations (displacement and quits) and informal employment, which we define in several ways posing the general question whether the burden of informality falls disproportionately on job separators in the Russian labor market. After we have established positive causal effects of displacement and quits on informal employment we analyze whether displaced workers experience more involuntary informal employment than their non-displaced counterparts. Our main results confirm our contention that displacement entraps some of the workers in involuntary informal employment. Those who quit, in turn, experience voluntary informality for the most part, but there seems a minority of quitting workers who end up in involuntary informal jobs. This scenario does not fall on all the workers who separate but predominantly on workers with low human capital. We also pursue the issue of informality persistence and find that informal employment is indeed persistent as some workers churn from one informal job to the next. Our study contributes to the debate in the informality literature regarding segmented versus integrated labor markets. It also contributes to the literature on displacement by establishing informal employment as an important cost of displacement. We also look at the share of undeclared wages in formal jobs and find that these shares are larger for separators than for incumbents, with displaced workers bearing the brunt of this manifestation of informality
    Date: 2012–01
  6. By: Tor Eriksson (Department of economics - University of Aarhus); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: Assuming that people care not only about what others do but also on what others think, we study respect in a labor market context where the length of the employment relationship is endogenous. In our three-stage gift-exchange experiment, the employer can express respect by giving the employee costly symbolic rewards after observing his level of effort. We study whether symbolic rewards are used by the employers mainly to praise employees or as a coordination device to build relational contracts by manipulating the balance between labor demand and supply in the market. We find that a high proportion of long-term relationships have been initiated by the assignment of symbolic rewards. However, the assignment of symbolic rewards decreases when it becomes clear that the relationship is durable, suggesting that employers mainly use symbolic rewards as a coordination device to initiate relational contracts. Compared to the balanced market condition, assigning symbolic rewards in initial relationships is less likely when there is excess demand in the market and more likely when there is excess supply, i.e. when the relationship is more valuable. Receiving symbolic rewards increases the employees' likelihood of accepting to continue the relationship with the same employer. It also motivates them to increase their effort further but only when the market is balanced. Overall, the ability to assign symbolic rewards does not give rise to higher profits because it is associated with lower rents offered to the employees on average, leading to lower effort levels.
    Keywords: Respect; Symbolic rewards; Coordination; Signaling; Labor market; Experiment
    Date: 2012
  7. By: John B. Donaldson; Natalia Gershun; Marc P. Giannoni
    Abstract: We consider a simple variant of the standard real business cycle model in which shareholders hire a self-interested executive to manage the firm on their behalf. A generic family of compensation contracts similar to those employed in practice is studied. When compensation is convex in the firm’s own dividend (or share price), a given increase in the firm’s output generated by an additional unit of physical investment results in a more than proportional increase in the manager’s income. Incentive contracts of sufficient yet modest convexity are shown to result in an indeterminate general equilibrium, one in which business cycles are driven by self-fulfilling fluctuations in the manager’s expectations that are unrelated to the economy’s fundamentals. Arbitrarily large fluctuations in macroeconomic variables may result. We also provide a theoretical justification for the proposed family of contracts by demonstrating that they yield first-best outcomes for specific parameter choices.
    Date: 2011
  8. By: Hippolyte D'Albis (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Paul Lau Sau-Him (HKU - School of Economics and Finance - University of Hong Kong); Miguel Sanchez-Romero (mpidr - Max Planck Institute for Demographic Research - Max Planck Institute)
    Abstract: Many studies specify human mortality patterns parametrically, with a parameter change affecting mortality rates at different ages simultaneously. Motivated by the stylized fact that a mortality decline affects primarily younger people in the early phase of mortality transition but mainly older people in the later phase, we study how a mortality change at an arbitrary age affects optimal retirement age. Using the Volterra derivative for a functional, we show that mortality reductions at older ages delay retirement unambiguously, but that mortality reductions at younger ages may lead to earlier retirement due to a substantial increase in the individual's expected lifetime human wealth.
    Keywords: mortality decline; incentive for early retirement; years-to-consume effect; lifetime human wealth effect
    Date: 2012–01
  9. By: M. Kopel; L. Lambertini
    Abstract: We show that Miller and Pazgal.s (2001) model of strategic delegation, in which managerial incentives are based upon relative performance, is affected by a non-existence problem which has impact on the price equilibrium. The undercutting incentives generating this result are indeed similar to those affecting the stability of price cartels.
    JEL: C73 L13
    Date: 2012–01
  10. By: Lobo, José (Arizona State University); Mellander, Charlotta (Jönköping International Business School); Stolarick, Kevin (University of Toronto); Strumsky, Deborah (University of North Carolina-Charlotte)
    Abstract: A longstanding research tradition assumes that endogenous technological development increases regional productivity. It has been assumed that measures of regional patenting activity or human capital are an adequate way to capture the endogenous creation of new ideas that result in productivity improvements. This process has been conceived as occurring in two stages. First, an invention or innovation is generated, and then it is developed and commercialized to create benefits for the individual or firm owning the idea. Typically these steps are combined into a single model of the “invention in/productivity out” variety. Using data on Gross Metropolitan Product per worker and on inventors, educational attainment, and creative workers (together with other important socio-economic controls), we unpack the model back to the two-step process and use a SEM modeling framework to investigate the relationships among inventive activity and potential inventors, regional technology levels, and regional productivity outcomes. Our results show almost no significant direct relationship between invention and productivity, except through technology. Clearly, the simplification of the “invention in/productivity out” model does not hold, which supports other work that questions the use of patents and patenting related measures as meaningful innovation inputs to processes that generate regional productivity and productivity gains. We also find that the most effective measure of regional inventive capacity, in terms of its effect on technology, productivity, and productivity growth is the share of the workforce engaged in creative activities.
    Keywords: Innovation; Productivity; Regional Technology; Patents; Human Capital; Creative Class
    JEL: C31 O10 O31 O47 R11 Z10
    Date: 2012–01–20
  11. By: Goodman, Joshua (Harvard University)
    Abstract: Left- and right-handed individuals have different brain structures, particularly in relation to language processing. Using five data sets from the US and UK, I show that poor infant health increases the likelihood of a child being left-handed. I argue that handedness can thus be used to explore the long-run impacts of differential brain structure generated in part by poor infant health. Even conditional on infant health and family background, lefties exhibit economically and statistically significant human capital deficits relative to righties. Compared to righties, lefties score a tenth of a standard deviation lower on measures of cognitive skill and, contrary to popular wisdom, are not over-represented at the high end of the distribution. Lefties have more emotional and behavioral problems, have more learning disabilities such as dyslexia, complete less schooling, and work in less cognitively intensive occupations. Differences between left- and right-handed siblings are similar in magnitude. Most strikingly, lefties have six percent lower annual earnings than righties, a gap that can largely be explained by these differences in cognitive skill, disabilities, schooling and occupational choice. Lefties work in more manually intensive occupations than do righties, further suggesting that lefties' primary labor market disadvantage is cognitive rather than physical. Those likely be left-handed due to genetics show smaller or no deficits relative to righties, suggesting the importance of environmental shocks as the source of disadvantage. Handedness provides parents and schools a costlessly observable characteristic with which to identify young children whose cognitive and behavioral development may warrant additional attention.
    Date: 2012–01
  12. By: Proost, Karin (Hogeschool-Universiteit Brussel (HUB), Belgium); Germeys, Filip (Hogeschool-Universiteit Brussel (HUB), Belgium); Schreurs, Bert (Maastricht University School of Business and Economics Department of Organization and Strategy, Maastricht, The Netherlands)
    Abstract: In two experiments, it was shown that the effectiveness of different tactics of self-promotion in personnel selection is affected by temporal distance. In Experiment 1, the use of a direct form of self-promotion was more successful when applying for immediate entry whereas an indirect form of self-promotion was more successful when applying for a job in the long term. In Experiment 2, promoting oneself in concrete terms (situation-specific behaviors) was more successful when applying for immediate entry while promoting oneself in abstract terms (traits) was more successful when applying for a job in the distant future.
    Date: 2011–09
  13. By: Jörg Baten; Mikolaj Szoltysek (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: We trace the development of numeracy in Poland and Russia from the early 17th century onwards, and numeracy in Belarus, Ukraine, and Lithuania from the 18th century onwards. The fact that western Poland was doing relatively well during the 16th and early 17th centuries, but was not able to converge to Western European levels during the 17th, 18th, and early 19th centuries, and even fell back relative to Southern Europe during this period, might support the hypothesis that the second serfdom development was one of the core factors delaying Eastern European human capital accumulation. The major wars in the region also had a devastating effect on numeracy levels.
    JEL: J1 Z0
    Date: 2012–01
  14. By: John P. Conley (Department of Economics, Vanderbilt University); Mario J. Crucini (Department of Economics, Vanderbilt University); Robert A. Driskill (Department of Economics, Vanderbilt University); Ali Sina Onder (Department of Economics, Uppsala University)
    Abstract: We investigate how increases in publication delays have affected the life-cycle of publications of recent Ph.D. graduates in economics. We construct a panel dataset of 14,271 individuals who were awarded Ph.D.s between 1986 and 2000 in US and Canadian economics departments. For this population of scholars, we amass complete records of publications in peer reviewed journals listed in the JEL (a total of 368,672 observations). We find evidence of significantly diminished productivity in recent relative to earlier cohorts when productivity of an individual is measured by the number of AER equivalent publications. Diminished productivity is less evident when number of AER equivalent pages is used instead. Our findings are consistent with earlier empirical findings of increasing editorial delays, decreasing acceptance rates at journals, and a trend toward longer manuscripts. This decline in productivity is evident in both graduates of top thirty and non-top thirty ranked economics departments and may have important implications for what should constitute a tenurable record. We also find that the research rankings of the faculty do not line up with the research quality of their students in many cases.
    Keywords: Academia, Economists, Research Productivity, Performance Evaluation, Tenure Process, Graduate Programs, Department Rankings
    JEL: A11 A23 J24 J29 J44
    Date: 2011–11
  15. By: Simone Bertoli (University of Florence and IAB (Institute for Employment Research)); Herbert Brücker (University of Bamberg and IAB (Institute for Employment Research))
    Abstract: The recent literature about the so-called beneficial brain drain assumes that destination countries are characterized not only by higher wages than the source country, but also by a higher or at least not lower relative return to education. However, it is a well known stylized fact that the returns to education are higher in rich than in poor countries. Against this background, we assess whether the main prediction of this literature, namely the possibility of a beneficial brain gain, still holds under the reverse assumption. We show that there is a still a strong case for a beneficial brain drain, even if the returns to education in the source country exceed those in the destination country. Immigration policies that are biased against unskilled workers are not necessary for a beneficial brain drain to occur once one considers that agents face heterogeneous migration costs.
    Keywords: migration; brain drain; skill premium; heterogeneous agents; selective immigration policies
    JEL: F22 J24 O15
    Date: 2012–01

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