nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒03‒21
twenty-one papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Awards at work By Neckermann, Susanne; Cueni, Reto; Frey, Bruno S.
  2. Does Human Capital Endowment of FDI Recipient Countries Really Matter? Evidence from Cross-Country Firm Level Data By Bhaumik, Sumon K.; Dimova, Ralitza
  3. Workforce skills across the urban-rural hierarchy By Jaison R. Abel; Todd M. Gabe; Kevin Stolarick
  4. The Influence of a wife’s working status on her husband’s accumulation of human capital. By Mano, Yukichi; Yamamura, Eiji
  5. The change in job opportunities By Elisabetta Olivieri
  6. Revisiting the Complementarity between Education and Training – The Role of Personality, Working Tasks and Firm Effects By Katja Görlitz; Marcus Tamm
  7. Mobility of Skills and Ideas By Aloña Martiarena
  8. The Role of Employees for Post-Entry Firm Growth By Andreas Koch; Jochen Späth; Harald Strotmann
  9. Lifetime labor supply and human capital investment By Rodolfo E. Manuelli; Ananth Seshadri; Yongseok Shin
  10. Small firm innovation performance and employee involvement By Andries, Petra; Czarnitzki, Dirk
  11. Testing a forgotten aspect of Akerlof’s gift exchange hypothesis: Relational contracts with individual and uniform wages By Martin G. Kocher; Wolfgang J. Luhan; Matthias Sutter
  12. Human capital portfolios By Pedro Silos; Eric Smith
  13. The Effects of Natural Disasters on Human Capital Accumulation By Thomas K.J. McDermott
  14. Age and Gender Composition of the Workforce, Productivity and Profits: Evidence from a New Type of Data for German Enterprises By Pfeifer, Christian; Wagner, Joachim
  15. Rethinking How Establishment Skills Surveys Can More Effectively Identify Workforce Skills Gaps By Schwalje, Wes
  16. Employed and Happy despite Weak Health? Labour Market Participation and Job Quality of Older Workers with Disabilities By Catherine Pollak
  17. The relationship between formal education and skill acquisition in young workers’ first jobs By D. VERHAEST; E. OMEY
  18. Up or Out: Research Incentives and Career Prospects of Postdocs in Germany By Fitzenberger, Bernd; Leuschner, Ute
  19. What Explains the Rise in CEO Pay in Germany? A Panel Data Analysis for 1977-2009 By Fabbri, Francesca; Marin, Dalia
  20. High quality workplace training and innovation in highly developed countries By Christian Rupietta; Uschi Backes-Gellner
  21. The role of perceived employer obligations in the interpretation of and reaction to expatriate compensation practices By Christelle Tornikoski

  1. By: Neckermann, Susanne; Cueni, Reto; Frey, Bruno S.
    Abstract: Social incentives like employee awards are widespread in the corporate sector and may be important instruments for solving agency problems. To date, we have little understanding of their effect on behavior. Unique panel data from the call center of a Fortune 500 financial services provider allow us to estimate the impact of awards on performance. Winning an award for voluntary work behaviors significantly increases subsequent core call center performance. The effect is short-lived, mainly driven by underperforming agents, and is reflected mostly in dimensions of the job that are hard to observe.We discuss various theories that could explain the effect. --
    Keywords: Awards,Motivation,Non-monetary Compensation,Insider Econometrics
    JEL: C23 J33 M52
    Date: 2012
  2. By: Bhaumik, Sumon K. (Aston University); Dimova, Ralitza (University of Manchester)
    Abstract: The stylized literature on foreign direct investment suggests that developing countries should invest in the human capital of their labour force in order to attract foreign direct investment. However, if educational quality in developing country is uncertain such that formal education is a noisy signal of human capital, it might be rational for multinational enterprises to focus more on job-specific training than on formal education of the labour force. Using cross-country data from the textiles and garments industry, we demonstrate that training indeed has greater impact on firm efficiency in developing countries than formal education of the work force.
    Keywords: human capital, training, firm-level efficiency, multinational enterprises
    JEL: F23 I25
    Date: 2012–02
  3. By: Jaison R. Abel; Todd M. Gabe; Kevin Stolarick
    Abstract: This paper examines differences in the skill content of work throughout the United States, ranging from densely populated city centers to isolated and sparsely populated rural areas. To do so, we classify detailed geographic areas into categories along the entire urban-rural hierarchy. An occupation-based cluster analysis is then used to measure the types of skills available in the regional workforce, which allows for a broader measure of human capital than is captured by conventional measures. We find that the occupation clusters most prevalent in urban areas—scientists, engineers, and executives—are characterized by high levels of social and resource-management skills, as well as the ability to generate ideas and solve complex problems. By contrast, the occupation clusters that are most prevalent in rural areas—machinists, makers, and laborers—are among the lowest in terms of required skills. These differences in the skill content of work shed light on the pattern of earnings observed across the urban-rural hierarchy.
    Keywords: Demography ; Labor supply ; Population ; Human capital ; Wages ; Rural areas ; Urban economics
    Date: 2012
  4. By: Mano, Yukichi; Yamamura, Eiji
    Abstract: Japanese household-level data describing a husband's earnings, his wife's working status, and their schooling levels are used to test the implications of a model proposing a time-consuming process of human capital accumulation within marriages, in which an educated wife is more productive. The empirical results support the model’s predictions: in particular (i) a non-working wife's schooling has a greater positive effect on her husband's earnings than a working wife’s schooling; and (ii) the effect of a non-working wife's schooling increases with the length of marriage, whereas the effect of a working wife’s schooling does not change over the course of marriage.
    Keywords: Human capital; wife's working status
    JEL: D13 J24
    Date: 2012–03–05
  5. By: Elisabetta Olivieri (Banca d'Italia)
    Abstract: In the last 15 years the Italian employment structure has undergone some radical changes. As a result, the proportion of high-skilled jobs (managers and professionals) has increased at the expense of medium-skilled jobs (clerks). Differently from the US, in Italy (and in many other European countries) there has been no increase in the share of low-skilled employment. Thus, we do not observe a polarization pattern in the employment structure, but a massive occupational upgrading towards high-skilled jobs. Furthermore, there is a positive correlation between changes in the employment and wage structures. This evidence is a signal of a demand-side shock which has hit the labour market in recent decades. In particular, according to the recent literature, technological change and outsourcing may have deeply affected labour demand in terms of skill level.
    Keywords: opportunities, employment, qualification
    JEL: D3 O3
    Date: 2012–02
  6. By: Katja Görlitz; Marcus Tamm
    Abstract: This paper addresses the question to which extent the complementarity between education and training can be attributed to differences in observable characteristics, i.e. to individual, job and firm specific characteristics. The novelty of this paper is to analyze previously unconsidered characteristics, in particular, personality traits and tasks performed at work which are taken into account in addition to the standard individual specific determinants. Results show that tasks performed at work are strong predictors of training participation while personality traits are not. Once working tasks and other job related characteristics are controlled for, the skill gap in training participation drops considerably for off-the-job training and vanishes for on-the-job training.
    Keywords: Training; personality traits; working tasks; Oaxaca decomposition
    JEL: I21 J24
    Date: 2011–12
  7. By: Aloña Martiarena
    Abstract: This paper examines and tests how the composition of human capital that workers acquire on-the-job determines the decision to found spinoffs and the know-how that entrepreneurs exploit in the new firm. I argue that given the different degree of specialisation in small and large firms, entrepreneurs emerging from small firms transfer knowledge from more diverse aspects of the business and create spinoffs more related to the main activity of the incumbent firm. Workers in large firms, however, benefit from higher returns to human capital that increase their opportunity costs to switch to an occupation that requires a different combination of skills. Since becoming an entrepreneur implies performing multiple tasks and makes part of their specialised skills unutilised, the minimum quality of the business idea at which they are willing to reveal the discovery is higher and, therefore, entrepreneurs emerging from large firms are of highest quality.
    Keywords: Spinoffs ; enrepreneurship ; human caital ; on-the-job learning ; firm performance
    JEL: L25 L26 J31 J33
    Date: 2012
  8. By: Andreas Koch; Jochen Späth; Harald Strotmann
    Abstract: While the majority of existing studies on the determinants of post-entry firm growth focus on the role of the founders or on the impact of firm-specific characteristics like size, age or industry affiliation, a possible impact of the characteristics of a start-up’s workforce on post-entry growth has been widely neglected in the literature so far. Based upon a comprehensive panel dataset of establishments in Germany, this paper contributes to fill this gap and examines the role of the initial employment structure with respect to qualification, age, gender and nationality for post-entry employment growth measured both in terms of employees and in terms of full-time equivalents. Moreover, it is analyzed whether the use of flexible work forms like regular part-time and / or marginal employment in the year of foundation affects post-entry growth. Our empirical results confirm that in particular the initial qualification structure of a start-up’s employees matters for post-entry growth. Establishments using flexible work forms show higher post-entry growth with respect to total hours worked, but a significantly lower growth with respect to the number of employees.
    Keywords: start-ups, post-entry performance, firm growth, job quality, flexibility, human capital
    JEL: J24 L10 L25
    Date: 2012–02
  9. By: Rodolfo E. Manuelli; Ananth Seshadri; Yongseok Shin
    Abstract: We develop a model of retirement and human capital investment to study the effects of tax and retirement policies. Workers choose the supply of raw labor (career length) and also the human capital embodied in their labor. Our model explains a significant fraction of the US-Europe difference in schooling and retirement. The model predicts that reforms of the European retirement policies modeled after the US can deliver 15–35 percent gains in per-worker output in the long run. Increased human capital investment in and out of school accounts for most of the gains, with relatively small changes in career length.
    Keywords: Human capital ; Labor supply ; Retirement
    Date: 2012
  10. By: Andries, Petra; Czarnitzki, Dirk
    Abstract: It is known that small firms rely mainly on the CEO's individual knowledge for developing innovations. Recent work suggests that this approach is inefficient since it underutilizes other employees' knowledge. We study to which extent using CEOs, managers and non-managerial employees' ideas enhances small firms' innovation performance. A Heckman selection model on 305 small firms shows that not only CEO's and managers', but also non-managerial employees' ideas contribute to innovation performance. However, contributions depend heavily on the individuals' area of expertise and on whether product or process innovation is desired. Our findings enrich the current view on the entrepreneurial team, but also warn against the implementation of one-size-fits-all employee involvement programs in small firms. --
    Keywords: Employee involvement,upper echelon,non-managerial employees,innovation performance,small firms
    JEL: M12 O31 O32
    Date: 2012
  11. By: Martin G. Kocher; Wolfgang J. Luhan; Matthias Sutter
    Abstract: Empirical work on Akerlof’s theory of gift exchange in labor markets has concentrated on the fair wage-effort hypothesis. In fact, however, the theory also contains a social component that stipulates that homogenous agents that are employed for the same wage level will exert more effort, resulting in higher rents and higher market efficiency, than agents that receive different wages. We present the first test of this component, which we call the fair uniform-wage hypothesis. In our laboratory experiment, we establish the existence of a significant efficiency premium of uniform wages. However, it is not the consequence of a stronger level of reciprocity by agents, but of the retrenchment of sanctioning options on the side of principals with uniform wages. Hence, implementing limitations to contractual freedom can have efficiency-enhancing effects.
    Keywords: gift exchange, multiple agents, uniform contracts, collective wage, experiment
    JEL: C72 C91 C92 D21 J31 J50
    Date: 2012–03
  12. By: Pedro Silos; Eric Smith
    Abstract: This paper assesses the trade-off between acquiring specialized skills targeted for a particular occupation and acquiring a package of skills that diversifies risk across occupations. Individual-level data on college credits across subjects and labor-market dynamics reveal that diversification generates higher income growth for individuals who switch occupations whereas specialization benefits those who stick with one type of job. A human capital portfolio choice problem featuring skills, abilities, and uncertain labor outcomes replicates this general pattern and generate a sizable amount of inequality. Policy experiments illustrate that forced specialization generates lower average income growth and lower turnover, but also lower inequality.
    Date: 2012
  13. By: Thomas K.J. McDermott (School of Business and Institute for International Integration Studies, Trinity College Dublin)
    Abstract: In this paper I investigate the effects of disasters on human capital accumulation using an extensive panel dataset on natural disasters, covering 170 countries over a 25 year period (1980-2004). My analysis shows that disasters have both a direct, contemporaneous effect and a long-term, indirect effect on human capital. While the direct effects - primarily related to injury, illness and death suffered as a result of the disaster - are relatively straightforward, the indirect effects will depend on household decision-making in the aftermath of the disaster. Treating human capital as a long-term investment decision, it is clear that access to finance is likely to be a crucial factor in household decisions about whether or not to invest in children's health and education. Indeed, my results show that aid flows are effective in mitigating the long-term impacts of disasters on health outcomes. However, for school enrollment rates, the longer-term effects of disasters are dependent on the availability of credit. These findings could have important policy implications. The indirect effects are unlikely to have been identified in previous analyses that focus on the short-term impacts of natural disasters. Given the importance of human capital in the process of economic development, the results presented here suggest that natural disasters represent a significant threat to the development prospects of relatively poor countries.
    Keywords: natural disasters, epidemics, human capital, credit markets, development
    JEL: O11 O15 Q54 Q56
    Date: 2011–11
  14. By: Pfeifer, Christian (Leuphana University Lüneburg); Wagner, Joachim (Leuphana University Lüneburg)
    Abstract: This empirical paper documents the relationship between composition of a firm's workforce (with a special focus on age and gender) and its performance (productivity and profitability) for a large representative sample of enterprises from manufacturing industries in Germany. We use unique newly available data that for the first time combine information from the statistics of employees covered by social security that is aggregated at the enterprise level and information from enterprise level surveys performed by the Statistical Offices. Our micro-econometric analysis confirms previous findings of concave age-productivity profiles, which are consistent with human capital theory, and adds a new finding of a rather negative effect of age on firms' profitability, which is consistent with deferred compensation considerations. Moreover, our analysis reveals for the first time that the ceteris paribus lower level of productivity in firms with a higher share of female employees does not go hand in hand with a lower level of profitability in these firms. If anything, profitability is (slightly) higher in firms with a larger share of female employees. This finding might indicate that lower productivity of women is (over)compensated by lower wage costs for women, which might be driven by general labor market discrimination against women.
    Keywords: ageing, firm performance, gender, productivity, profitability, Germany
    JEL: D22 D24 J21 J24 L25
    Date: 2012–02
  15. By: Schwalje, Wes
    Abstract: Through a multicountry, practice-based review of establishment skills surveys, this article identifies conceptual issues with defining and measuring skills gaps. By harmonizing divergent conceptualizations, an operational definition of skills gaps as a situation in which current employees lack the skills to perform their jobs which results in the compromised ability of a firm to meet business objectives is proposed. This operationalization of the concept offers a more complete answer to how firms are impacted by workforce deficiencies in achieving business objectives implying that understanding job proficiency without assessing the organizational context in which workforce skills are deployed towards market objectives is insufficient. By addressing measurement issues, an alternative approach to establishment skills surveys is advanced that can play a more effective role in determining how workforce skills influence achievement of firm business objectives. The open systems model of the firm is used to explain how skills gaps serve as a bottleneck to the overall functioning of the firm and to demonstrate that firm mitigation strategies are subject to managerial perceptions which can influence the effectiveness and level at which strategies are targeted. A typology of the causes of skills gaps is also proposed as a starting point for government intervention.
    Keywords: skills formation; skills gaps; skills shortages; establishment skills surveys; workforce development policy; skills gap causes; skills gap impacts; skills gap mitigation
    JEL: J24
    Date: 2012–03–08
  16. By: Catherine Pollak (IRDES institut for research and information in health economics)
    Abstract: European countries with high senior employment rates have the highest levels of job satisfaction despite an older and more physically limited workforce. In this paper, we argue that this paradox can be explained by heterogeneous levels of job quality: better working conditions may enable older workers with disabilities to remain satisfied and employed. Using panel data from the Survey of Health, Ageing and Retirement in Europe, we find that health status, job satisfaction, but also working conditions, are major individual determinants of early labour market exits. We also show that high intrinsic and extrinsic rewards can mitigate the selective effects of disability. Finally,the comparative analysis reveals that older workers with disabilities are more likely to be employed in countries where they receive higher rewards. The findings therefore indicate that improved job quality is a major factor of successful active ageing strategies.
    Keywords: Job satisfaction, Working conditions, Occupational health, Ageing labour supply.
    JEL: J28 J22 I19
    Date: 2012–03
  17. By: D. VERHAEST; E. OMEY
    Abstract: We analyse the relationship between formal education and on-the-job skill acquisition (SA) for a sample of Flemish school-leavers. SA is measured directly through subjective assessments. Formal education is found to reinforce labour market inequality because additional years of education enhance the probability of all types of SA. With respect to general SA, this impact is higher for generally-educated compared to vocationally-educated individuals. This is predominantly explained by between-occupation effects; jobs that require more years of formal education also require more additional SA. Within occupations, we find some limited evidence on both dominant complementary and substitution effects. Under-educated workers have lower overall SA probabilities than adequately educated workers in similar occupations; over-educated workers with a vocational degree acquire less transferable or general skills than their adequately educated colleagues. Because over-educated workers work in jobs with less additional SA requirements, they also acquire less additional skills than adequately educated workers with similar educational backgrounds.
    Keywords: OJT, vocational education, overeducation, overqualification, underemployment
    Date: 2012–01
  18. By: Fitzenberger, Bernd (University of Freiburg); Leuschner, Ute (University of Freiburg)
    Abstract: Academic careers in Germany have been under debate for a while. We conduct a survey among postdocs in Germany, to analyze the perceptions and attitudes of postdocs regarding their research incentives, their working conditions, and their career prospects. We conceptualize the career prospects of a postdoc in a life-cycle perspective of transitions from academic training to academic or non-academic jobs. Only about half of the postdocs sees strong incentives for academic research, but there is quite a strong confidence to succeed in an academic career. Furthermore, postdocs who attended a PhD program show better career prospects and higher research incentives compared to others. Academic career prospects and motivation are strongest for assistant professors. Apart from this small group, however, postdocs report only a small impact of the university reforms of the last decade. Female postdocs show significantly higher research incentives but otherwise we find little gender differences. Finally, good prospects in non-academic jobs are not associated with a reduction in the motivation for research.
    Keywords: postdocs, academic career prospects, research incentives, university reforms
    JEL: A11 A29 I21 I23 J24 J49
    Date: 2012–03
  19. By: Fabbri, Francesca; Marin, Dalia
    Abstract: The compensation of executive board members in Germany has become a highly controversial topic since Vodafone's hostile takeover of Mannesmann in 2000 and it is again in the spotlight since the outbreak of the financial crisis of 2009. Based on unique panel data evidence of the 500 largest firms in Germany in the period 1977-2009 we test two prominent hypotheses in the literature on executive pay: the manager power hypothesis and the efficient pay hypothesis. We find support for the manager power hypothesis for Germany as executives tend to be rewarded when the sector is doing well rather than the firm they work for. We reject, however, the efficient pay hypothesis as CEO pay and the demand for managers increases in Germany in difficult times when the typical firm size shrinks. We find further that domestic and global competition for managers has contributed to the rise in executive pay in Germany. Lastly, we show that CEOs in the banking sector are provided with incentives for performance and that the great recession of 2009 acted as a disciplining devise on CEO pay in Germany.
    Keywords: manager power hypothesis; efficient pay hypothesis; domestic and global competition for managers; CEO pay in banks; CEO pay in the financial crisis
    JEL: F23 J3 M12 M52
    Date: 2012–03
  20. By: Christian Rupietta (Department of Business Administration, University of Zurich); Uschi Backes-Gellner (Department of Business Administration, University of Zurich)
    Abstract: This paper examines whether high quality, curriculum-based training at the workplace makes firms more innovative. Our dependent variable innovativeness is operationalized with four different measures: general innovation, product innovation, process innovation and patent applications. As explanatory variable we use regulated apprenticeship training programs with three to four years length of the type found in German speaking countries. We argue that this type of curriculum-based workplace training provides an additional source of knowledge in the knowledge production process through its innovative and steadily revised training curricula. We expect that this additional source of knowledge leads to higher innovation in training firms compared to non-training firms. Our empirical results show that up-to-date curriculum-based apprenticeship training is positively associated with all of the four innovation measures. Taking endogenous apprenticeship decision into account, the positive effect is only significant for general innovation and patent applications.
    Keywords: Apprenticeship training, Innovation, Education
    JEL: I20 O31
    Date: 2012–03
  21. By: Christelle Tornikoski (University of Vaasa - University of Vaasa, MC - Management et Comportement - Grenoble École de Management (GEM))
    Abstract: In this paper I examine the relationship between expatriates' perceptions of their compensation package and their affective commitment. The results of this cross-sectional study amongst 263 Finnish expatriates suggest the mediating role of the employee's perceptions of fulfillment of their employer obligations. This leads to the consideration that employees systematically assess their total reward package, interpret and give meaning to these compensation signals in terms of fulfillment of perceived employer obligations and simultaneously re-adapt or adjust their attitudes at any moment thorough their exchange relationship. In addition, this study gives empirical support for some of Rousseau and Ho's (2000) theoretical arguments regarding psychological contract (PC) issues in compensation. Furthermore it provides evidence that three of the PC feature measures for employer obligations developed by Janssens, Sels and Van den Brande (2003) can be replicated. Finally the implications of these findings for future research are discussed.
    Keywords: psychological contract; total reward; affective commitment; meaning; expatriate;
    Date: 2011–12–02

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.
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