nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒04‒03
twenty-two papers chosen by
Tommaso Reggiani
Universita' di Bologna

  3. Human and financial capital for microenterprise development: Evidence from a field and lab experiment By Lars Ivar Oppedal Berge; Kjetil Bjorvatn; Bertil Tungodden
  4. A STUDY OF HUMAN SKILL ACHIEVEMENT IN MALAYSIAN PUBLIC UNIVERSITIES: KNOWLEDGE, SKILL AND ATTITUDE By Yunos bin Ngadiman Author_Email:; Dr. Burairah bin Hussin; Dr. Izaidin bin Abdul Majid
  5. What Explains the Rise in CEO Pay in Germany? A Panel Data Analysis for 1977-2009 By Fabbri, Francesca; Marin, Dalia
  6. Risk Aversion and Effort in an Incentive Pay Scheme with Multiplicative Noise: Theory and Experimental Evidence By Zubanov, N.V.
  7. Promotion Signals, Age and Education By Bognanno, Michael L.; Melero Martín, Eduardo
  8. The Multi-Dimensional Effects of Reciprocity on Worker Effort: Evidence from a Hybrid Field-Laboratory Labor Market Experiment By Kim, Min-Taec; Slonim, Robert
  9. The Role of Salience in Performance Schemes: Evidence from a Field Experiment By Englmaier, Florian; Roider, Andreas; Sunde, Uwe
  10. Delayed Graduation and Overeducation: A Test of the Human Capital Model versus the Screening Hypothesis By Aina, Carmen; Pastore, Francesco
  11. Dynamics and Convergence in Chief Executive Officer Pay By Hristos Doucouliagos; Michael Graham; Janto Haman
  12. Does FDI Promote Human Capital Accumulation? The Role of Gradual Financial Liberalization By Qichun He
  13. Work Hours in Chinese Enterprises: Evidence From Matched Employer-Employee Data By Vinod Mishra; Russell Smyth
  14. Wage dispersion and team performance: a theoretical model and evidence from baseball By Robert Breunig; Bronwyn Garrett-Rumba; Mathieu Jardin; Yvon Rocaboy
  15. Human Capital, Innovation, and Climate Policy: An Integrated Assessment By Carraro, Carlo; De Cian, Enrica; Tavoni, Massimo
  17. Dynamically Sabotage-Proof Tournaments By Junichiro Ishida
  18. Limited Life Expectancy, Human Capital and Health Investments: Evidence from Huntington Disease By Emily Oster; Ira Shoulson; E. Ray Dorsey
  19. Why Are Migrants Paid More? By Alex Bryson; Giambattista Rossi; Rob Simmons
  20. CEO Bonding: Who Posts Performance Bonds and Why? By Alex Bryson; John Forth; Minghai Zhou
  21. The effect of non-pecuniary job attributes on labour supply By Holguer Xavier JARA TAMAYO
  22. Gender Gaps in Performance: Evidence from Young Lawyers By Ghazala Azmat; Rosa Ferrer

  1. By: Nazlina Zakaria Author_Email: (Universiti Utara Malaysia (Malaysia)); Dr. Siti Rohaida Mohamed Zainal (Universiti Sains Malaysia (Malaysia)); Prof. Dr. Aizzat Mohd. Nasurdin (Universiti Sains Malaysia (Malaysia))
    Keywords: Human resource management practices, organizational performance and small and medium enterprises (SMEs)
    JEL: M0
    Date: 2011–10
  2. By: Wendy Ming-Yen TEOH Author_Email: (Faculty of Business and Law, Multimedia University, Malaysia); Chwan-Yu YAU (Faculty of Business and Law, Multimedia University, Malaysia); Siong-Choy CHONG (Chancellery Division, Linton University College, Malaysia)
    Keywords: Job Burnout, Organisational Respect, Workload, Communication, Demographic Factors,Manufacturing Companies,HR Employees,Malaysia
    JEL: M0
    Date: 2011–06
  3. By: Lars Ivar Oppedal Berge; Kjetil Bjorvatn; Bertil Tungodden
    Abstract: Which is the most binding constraint to microenterprise development, human capital or financial capital? To answer this question, we present the first field experiment that jointly investigates these two constraints for poor microentrepreneurs, by introducing separate treatments of business training and a business grant. We combine survey data and data from a lab experiment to investigate treatment effects on business results, business practices, business skills and mind-set. Our study demonstrates a strong effect of business training on male entrepreneurs, while the effect on female entrepreneurs is much more muted. There is no effect of the business grant for either males or females. The results suggest that human capital may be the more important constraint for poor microentrepreneurs, but also point to the need for more comprehensive measures to promote development among female entrepreneurs.
    Date: 2011
  4. By: Yunos bin Ngadiman Author_Email: (Universiti Teknikal Malaysia Melaka); Dr. Burairah bin Hussin (Universiti Teknikal Malaysia Melaka); Dr. Izaidin bin Abdul Majid (Universiti Teknikal Malaysia Melaka)
    Keywords: Sustainable Development, Knowledge, Skill and Attitude, Human Skill Achievement, Human Resource Development, Overall Equipment Efficiency Model
    JEL: M0
    Date: 2011–06
  5. By: Fabbri, Francesca (University of East Anglia); Marin, Dalia (University of Munich)
    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: executive compensation, corporate governance
    JEL: F23 J3 M12 M52
    Date: 2012–03
  6. By: Zubanov, N.V.
    Abstract: The application of the classical "linear" model of incentive pay to the case when the noise is multiplicative to effort generates two predictions for a given strength of incentives: 1) more risk-averse workers will put in less effort, and 2) setting a performance target will weaken the negative risk aversion--effort link. The data from a real-effort laboratory experiment involving 85 student participants support both these predictions. Implications of the model and empirical findings to the literature on, and practice of, personnel management are discussed.
    Keywords: risk aversion;incentive pay;performance targets
    Date: 2012–03–20
  7. By: Bognanno, Michael L. (Temple University); Melero Martín, Eduardo (Universidad Carlos III de Madrid)
    Abstract: This paper examines whether more informative job promotions carry larger wage increases. In job assignment models with asymmetric information, unexpected promotions send a signal to the external labor market to revise upward their assessment of a worker's ability. The employing firm must then increase wages to prevent the worker from being bid away. Less educated workers are assumed to come from a group with lower average ability. Their promotion is hypothesized to signal a larger positive assessment of their ability than for more highly educated workers for whom promotion is expected. Promotions for younger workers, with less known about their abilities, should also result in strong signaling effects. We find results in accordance with our hypotheses regarding the effect of both age and education on the gains to promotion. However, the statistical significance of the estimates hinges on the promotion definition. Younger workers receive statistically significantly higher wage increases upon promotion only when promotion is defined by the attainment of managerial responsibilities not previously held. Less educated workers obtain statistically significantly larger wage increases upon promotion at a weak level of significance (10%) across definitions of promotion but at a high level of significance (5%) only when the subjective definition of promotion is used. We interpret the sensitivity to the definition of promotion to suggest that promotions may be heterogeneous in the information they reveal about the employee in way that depends on the characteristics of the employee.
    Keywords: promotion, signaling, internal labor markets
    JEL: J3
    Date: 2012–03
  8. By: Kim, Min-Taec (University of Sydney); Slonim, Robert (University of Sydney)
    Abstract: We examine the gift exchange hypothesis on both the quantity and quality of output using a hybrid field-laboratory labor market experiment. We recruited participants to enter survey data for a well-known charitable organization. Workers were paid either a high or low wage. We find that although the total number of surveys entered did not vary with the wage, high wage workers made fewer errors and entered more surveys after controlling for errors. We further find that for low costs associated with errors, offering the low wage maximizes profits, but for higher costs paying the higher "gift exchange" wage maximizes profits.
    Keywords: laboratory and field experiments, multi-tasking, reciprocity, gift exchange
    JEL: C91 C93 J33 J41 D03
    Date: 2012–03
  9. By: Englmaier, Florian; Roider, Andreas; Sunde, Uwe
    Abstract: Incentive schemes affect performance and priorities of agents but, in reality, they can be complicated even for simple tasks. We analyze the effects of the salience of incentives in a team production setting where the principal has an interest in quantity and quality of output. We use data from a controlled field experiment that changed the communication of the incentive system without changing the incentive system. The results indicate that salience of incentives itself is statistically and economically important for performance. We find that higher salience of incentives for quantity increases quantity, reduces quality, and increases in-pocket income of team managers.
    Keywords: attention; communication; field experiments; incentives; salience
    JEL: D03 D80 J30 M52
    Date: 2012–03
  10. By: Aina, Carmen (University of Piemonte Orientale); Pastore, Francesco (University of Naples II)
    Abstract: The academic circles are devoting a growing interest to delayed graduation and overeducation, but none has analyzed the joint consequences of these two phenomena. Thus, this paper studies the link between graduation not within the minimum period and overeducation, and the effects of these variables on wages, using the ISFOL-Plus data. According to the human capital model, delayed graduation increases a student' human capital and should, therefore, reduce her probability of being overeducated, while increasing her wage. According to the screening hypothesis, instead, delayed graduation signals low skills and therefore increases the chances of being overeducated, while bearing a wage penalty. The evidence lines towards predictions based on the screening hypothesis. First, delayed graduation increases the chances of overeducation. In addition, the direct wage penalty associated to delayed graduation equals 7% of the median wage. However, being a determinant of overeducation, it also indirectly contributes to the penalty of 19.8% of the median wage associated to overeducation. These effects are sizeable, considering the very low returns to higher education in Italy reported in previous studies.
    Keywords: university-to-work transition, delayed graduation, overeducation, human capital theory, screening hypothesis, earnings equations, Italy
    JEL: C25 C26 C33 I2 J13 J24
    Date: 2012–03
  11. By: Hristos Doucouliagos; Michael Graham; Janto Haman
    Abstract: This study investigates dynamics and convergence in CEO pay in Australia’s largest corporations over an 18 year period. Utilizing dynamic panel estimators, we find that CEO pay is driven by dynamic adjustments, firm size, board size, CEO tenure and firm performance. The largest pay-performance effect emerges for long-term incentive pay. We also show that by ignoring dynamics, prior studies may have understated the size of payperformance effects. Analysis of convergence shows a clear pattern of catch up among firms making CEO pay more equitable over time. The analysis points to efficiency in CEO remuneration contracts rather than managerial entrenchment.
    Keywords: CEO Pay; Dynamic Panel Data Analysis; Pay for Performance; Convergence
    JEL: G30 J33 M52
    Date: 2012–03–21
  12. By: Qichun He (CEMA, Central University of Finance and Economics)
    Abstract: We argue that how inward foreign direct investment (FDI) affects domestic human capital accumulation (HCA) depends on the degree of financial deregulation. Utilizing the Chinese experience and its panel data, the OLS (ordinary least squares) regressions suggest that FDI has a significant positive interaction effect with financial deregulation on HCA. Specifically, the estimated coeffcient on FDI is positive but insignificant, while that on its interaction with financial deregulation is significantly positive. It means that FDI promotes HCA in China, and higher degree of financial deregulation reinforces the promoting effect. Instrumenting FDI with two sets of instruments grounded on different rationales (which ensures valid identification), our limited-information maximum likelihood (LIML) estimation results are similar to those of OLS. The results are also robust when we control for other factors affecting HCA, and time and province effects.
    Keywords: Foreign Direction Investment, Human Capital, Gradual Financial Deregulation, Interaction, Panel Data
    JEL: C23 F21 J24
    Date: 2011–06
  13. By: Vinod Mishra; Russell Smyth
    Abstract: The purpose of this paper is to explore the factors that are correlated with hours worked in China. A distinguishing feature of the study is that we use representative matched employer and employee data. Hence, in addition to the usual worker characteristics examined in conventional economic models of labour supply, we also take account of the influence of firm characteristics and policies in influencing the number of hours worked. The results suggest that in addition to the hourly wage rate, labour supply characteristics and human capital characteristics of the individual, firm-level differences are important in explaining variation in weekly hours worked in Chinese firms. In particular, our results suggest that there is a norm of longer working hours in firms which employ a high proportion of female workers, that hours worked are less in firms which pay overtime and that hours worked are less in firms in which labour disputes have disrupted production. The implications of the results for Chinese firms wishing to improve labour management practices are discussed.
    Keywords: China, hours worked, wages, firms
    JEL: J22 J30
    Date: 2012–03
  14. By: Robert Breunig; Bronwyn Garrett-Rumba; Mathieu Jardin; Yvon Rocaboy
    Abstract: We develop a general theoretical model of the effect of wage dispersion on team performance which nests two possibilities: wage inequality may have either negative or positive effects on team performance. A parameter which captures the marginal cost of effort, which we estimate using game-level data from Major League Baseball, determines whether wage dispersion and team performance are negatively or positively related. We find low marginal cost of effort; consequently wage disparity is negatively related to team performance. Results from game and season-level regressions also indicate a negative relationship between inequality and performance. We discuss a variety of interpretations of our results.
    Keywords: wage dispersion; labor economics; sports economics; baseball; ability; effort
    JEL: D3 J3
    Date: 2012–03
  15. By: Carraro, Carlo; De Cian, Enrica; Tavoni, Massimo
    Abstract: This paper looks at the interplay between human capital and innovation in the presence of climate and educational policies. Using recent empirical estimates, human capital and general purpose R&D are introduced in an integrated assessment model that has been extensively applied to study the climate change mitigation. Our results suggest that climate policy stimulates general purpose as well as clean energy R&D but reduces the incentive to invest in human capital formation. Human capital increases the productivity of labour and the complementarity between labour and energy drives its pollution-using effect (direct effect). When human capital is an essential input in the production of generic and energy dedicated knowledge, the crowding out induced by climate policy is mitigated, thought not completely offset (indirect effect). The pollution-using implications of the direct effect prevail over the indirect contribution of human capital to the creation of new and cleaner knowledge. A policy mix that combines educational as well as climate objectives offsets the human capital crowding-out with a moderate, short-term consumption loss. Human capital is complement to all forms of innovation and an educational policy stimulates both energy and general purpose innovation. This result has important policy implications considering the growing concern that effective climate policy is conditional on solid economic development and therefore it needs to be supplemented by other policy targets.
    Keywords: Climate Policy; Human Capital; Innovation; Sustainable Development
    JEL: O33 O41 Q43
    Date: 2012–03
  16. By: Ismail Bakan Author_Email: (Kahramanmaras Sutcu Imam University. Turkey); Tuba Büyükbese (Kahramanmaras Sutcu Imam University. Turkey); Burcu Ersahan (Kahramanmaras Sutcu Imam University. Turkey)
    Keywords: Organizational Commitment, Education, Empirical Study
    JEL: M0
    Date: 2011–06
  17. By: Junichiro Ishida
    Abstract: This paper explores the consequences of sabotage for the design of incentive contracts. The possibility of sabotage gives rise to a dynamic concern, similar to the Ratchet effect, which distorts the agents' incentives. We first show that the mere possibility of sabotage may make it impossible to implement the first-best effort, and then offer two distinct incentive schemes, fast track and late selection, to circumvent this problem. The present model offers a mechanism through which these two schemes arise in a unified framework.
    Date: 2012–03
  18. By: Emily Oster; Ira Shoulson; E. Ray Dorsey
    Abstract: One of the most basic predictions of human capital theory is that life expectancy should impact human capital investment. Limited exogenous variation in life expectancy makes this difficult to test, especially in the contexts most relevant to the macroeconomic applications. We estimate the relationship between life expectancy and human capital investments using genetic variation in life expectancy driven by Huntington disease (HD), an inherited degenerative neurological disorder with large impacts on mortality. We compare investment levels for individuals who have ex ante identical risks of HD but learn (through early symptom development or genetic testing) that they do or do not carry the genetic mutation which causes the disease. We find strong qualitative support: individuals with more limited life expectancy complete less education and less job training. We estimate the elasticity of demand for college completion with respect to years of life expectancy of 0.40. This figure implies that differences in life expectancy explain about 10% of cross-country differences in college enrollment. Finally, we use smoking and cancer screening data to test the corollary that health capital is responsive to life expectancy.
    JEL: I15 I25 J24
    Date: 2012–03
  19. By: Alex Bryson; Giambattista Rossi; Rob Simmons
    Abstract: In efficient global labour markets for very high wage workers one might expect wage differentials between migrant and domestic workers to reflect differences in labour productivity. However, using panel data on worker-firm matches in a single industry over a seven year period we find a substantial wage penalty for domestic workers which persists within firms and is only partially accounted for by individual labour productivity. We show that the differential partly reflects the superstar status of migrant workers. This superstar effect is also apparent in migrant effects on firm performance. But the wage differential also reflects domestic workers' preferences for working in their home region, an amenity for which they are prepared to take a compensating wage differential, or else are forced to accept in the face of employer monopsony power which does not affect migrant workers.
    Keywords: wages, migration, superstars, productivity, compensating wage differentials, sports
    JEL: J24 J31 J61 J71 M52
    Date: 2012–03
  20. By: Alex Bryson; John Forth; Minghai Zhou
    Abstract: Despite their theoretical value in tackling principal-agent problems at low cost to firms there is almost no empirical literature on the prevalence and correlates of performance bonds posted by corporate executives. Using data for China we examine their incidence and test propositions from principal-agent theory regarding their correlates. Around one-tenth of corporations deploy performance bonds. They are sizeable relative to CEO cash compensation. Ceteris paribus, CEO's posting performance bonds are more likely than other CEO's to have their compensation linked to firm performance in other ways and the elasticity of their pay with respect to firm performance is greater. They are also more likely to hold company stock. Thus bonds appear to be complements to rather than substitutes for other forms of corporate incentive. The negative association between bonds and sales volatility is consistent with principal-agent theory. Positive associations between performance bonds and firm age, the CEOs ranking in the Communist Party, and city-level clustering in the use of bonds are all consistent with "legacy" effects dating back to the use of performance bonds in the early reform period. The only corporate governance measure that is strongly and robustly associated with an increased use of bonds is employee representation on the board of directors.
    Keywords: performance bonds, security deposits, executive compensation, CEOs, corporate governance, agency theory, China
    JEL: G34 J31 J33 M12 M52 O16 P31
    Date: 2012–03
  21. By: Holguer Xavier JARA TAMAYO
    Abstract: The aim of this paper is to analyse the effect of non-pecuniary job attributes on labour supply. We develop a discrete choice model of labour supply where the choice alternatives are characterised by bundles of hours of work and job insecurity. The parameters of the utility function are obtained using maximum simulated likelihood with Halton sequences to account for unobserved heterogeneity in preferences. We compare the predictive power and labour supply elasticities obtained with our model to those of a more traditional model where only discrete hours choices characterise a job. The results show that once job insecurity is included in the discrete choice alternatives, the predictive power of the model improves significantly. Labour supply elasticities are lower than those obtained by a traditional discrete hours model, but not significantly different. Finally, a decrease of job insecurity at work has a positive and significant effect on participation, implying that policies aimed at improving working conditions could be used to influence labour supply decisions.
    Date: 2011–10
  22. By: Ghazala Azmat; Rosa Ferrer
    Abstract: This paper documents and studies the gender gap in performance among associate lawyers in the United States. Unlike most high-skilled professions, the legal profession uses widely-accepted and objective methods to measure and reward lawyers' productivity: the number of hours billed to clients and the amount of new client revenue generated. We find clear evidence of a gender gap in annual performance. Male lawyers bill ten-percent more hours and bring in more than double the new client revenue. We show that the differential impact across genders in the presence of young children and the differences in aspirations to become a law-firm partner account for a large part of the difference in performance. These gaps in performance have important consequences for gender gaps in earnings. While individual and firm characteristics explain up to 50 percent of the gap in earnings, the inclusion of performance measures explains most of the remainder.
    Keywords: performance measures, gender gaps, lawyers
    JEL: M52 J16 K40 J44
    Date: 2012–03

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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