nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒04‒17
eighteen papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Horizontal Transfer and Promotion: New Evidence and an Interpretation from the Perspective of Task-Specific Human Capital By Masaru Sasaki; Katsuya Takii; Junmin Wan
  2. A back-door brain drain By Stark, Oded; Byra, Lukasz
  3. Quitting and Peer Effects at Work By Julie Rosaz; Robert Slonim; Marie-Claire Villeval
  4. Immigration, Human Capital and the Welfare of Natives By Eberhard, Juan
  5. Does High Involvement Management Improve Worker Wellbeing? By Alex Bryson; Bockerman, P.; Ilmakunnas, P.
  6. The Money Value of a Man By Mark Huggett; Greg Kaplan
  7. HRM and Workplace Motivation: Incremental and Threshold Effects By Alex Bryson; White, M.
  8. Competition for Managers, Corporate Governance and Incentive Compensation By Acharya, Viral V; Gabarro, Marc; Volpin, Paolo
  9. Teaching in the Lab: Financial Incentives in the Education Processs By Christoph Helbach; Klemens Keldenich
  10. The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment By Josse Delfgaauw; Robert Dur; Arjan Non; Willem Verbeke
  11. CEO Bonding: Who Posts Performance Bonds and Why? By Alex Bryson; John Forth; Zhou, M.
  12. Workers’ motivation: the italian case of cooperative credit banks By Troisi, Roberta; Nese , Annamaria
  13. Product Architecture and Human Resource Management: Comparing Japanese, Chinese, and Korean Firms Based on a Questionnaire Survey By Tsuru, Tsuyoshi; Nakajima, Kentaro
  14. Management Practices, Self-Selection into Management Training Participation, and Training Effects in the Garment Industry in Ethiopia By Girum Abebe; Tetsushi Sonobe
  15. Delegation and Rewards By Vetter, Stefan
  16. Being innovative for surviving: the role of HRM practices. By Mirta Diaz Fernandez; Mar Bornay Barrachina; Alvaro Lopez Cabrales
  17. Improving Ethical Decision-Making in Organizations through Ethical Competencies By Rafael Morales Author-1-Name-First: Rafael Author-1-Name-Last: Morales; Carmen Cabello Author-2-Name-First: Carmen Author-2-Name-Last: Cabello
  18. The Control Premium: A Preference for Payoff Autonomy By Owens, David; Grossman , Zachary; Fackler , Ryan

  1. By: Masaru Sasaki (Osaka University and IZA); Katsuya Takii (Osaka University); Junmin Wan (Fukuoka University)
    Abstract: This paper provides new evidence about horizontal transfer and promotion using the largest available personnel panel data in Japan and interprets them from the perspective of task-specific human capital. We find that firms synchronize their employees' promotion and horizontal transfers. Then, we show theoretically that task-specific human capital can naturally generate such synchronization. We also find that the directors in an accounting department have the highest probability of being promoted to become board members, while those in a research department have the lowest. This suggests that top managers need a balanced skill set, in which allocative skill is relatively important.
    Keywords: Rotation, Promotion and Task-Specific Human Capital
    JEL: J62 M51
    Date: 2012–04
  2. By: Stark, Oded; Byra, Lukasz
    Abstract: In this paper we study the impact of the international migration of unskilled workers on skill formation and the average skill level in the home country. We analyze what appears to be the least threatening scenario from the point of view of its effect on the supply of skills at home: namely, migration exclusively by unskilled workers. Somewhat surprisingly, we find that even without the departure of skilled workers, the home country suffers reduced aggregate skill formation. Although as a response to a higher wage rate per unit of human capital in the new equilibrium skilled workers choose to accumulate more human capital than before the opening up to migration of unskilled workers, the number and share of skilled workers in the home country’s workforce fall. The combined effect is a decrease in the average level of human capital in the home country.
    Keywords: Migration of unskilled workers, Human capital formation, Depletion of human capital, Labor and Human Capital, F22, J24, O15,
    Date: 2012–04
  3. By: Julie Rosaz (University of Montpellier 1, LAMETA, avenue Raymond Dugrand - Site Richter C.S. 79606, F-34960 Montpellier Cedex 2, France); Robert Slonim (University of Sydney, Department of Economics, Merewether building, NSW 2006 Sydney, Australia; IZA, Bonn, Germany); Marie-Claire Villeval (University of Lyon 2, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne, Ecully, F-69130, France; IZA, Bonn, Germany. GATE: 93, Chemin des Mouilles, 69130 Ecully, France)
    Abstract: While peer effects have been shown to affect worker's productivity when workers are paid a fixed wage, there is little evidence on their influence on quitting decisions. This paper presents results from an experiment in which participants receive a piece-rate wage to perform a real-effort task. After completing a compulsory work period, the participants have the option at any time to continue working or quit. To study peer effects, we randomly assign participants to work alone or have one other worker in the room with them. When a peer is present, we manipulate the environment by giving either vague or precise feedback on the co-worker's output, and also vary whether the two workers can communicate. We find that allowing individuals to work with a co-worker present does not increase worker's productivity. However, the presence of a peer in all working conditions causes workers to quit at more similar times. When, and only when, communication is allowed, workers are significantly more likely to (1) stay longer if their partner is still working, and (2) work longer the more productive they are. We conclude that when workers receive a piece-rate wage, critical peer effects occur only when workers can communicate with each other.
    Keywords: Quits, peer effects, communication, feedback, experiment
    JEL: C91 D83 J63 J28 J81
    Date: 2012
  4. By: Eberhard, Juan
    Abstract: I analyze the effect of an unexpected influx of immigrants on the price of skill and hence on the earnings, human capital accumulation and educational attainment of native workers. In order to study these effects, I develop a general equilibrium model with heterogeneous workers who differ in their level of skill and in their ability to learn new skills. These workers accumulate human capital optimally using information about the current and future market price of skill to guide their decisions. To assess the impact of immigration, I compare simulated earnings in the presence of immigration with a series of counterfactual experiments. My findings suggest that immigration has a small negative direct effect on earnings, but a positive and relatively large impact indirectly through human capital accumulation and educational attainment. This latter mechanism explains 60% of the variations in earnings caused by immigration.
    Keywords: Human Capital; Immigration; Heterogeneous Agents
    JEL: D31 E24 J61
    Date: 2012–03
  5. By: Alex Bryson; Bockerman, P.; Ilmakunnas, P.
    Abstract: Employees exposed to high involvement management (HIM) practices have higher subjective wellbeing, fewer accidents but more short absence spells than “like” employees not exposed to HIM. These results are robust to extensive work, wage and sickness absence history controls. We present a model which highlights the possibility of higher short-term absence in the presence of HIM because it is more demanding than standard production and because multi-skilled HIM workers cover for one another’s short absences thus reducing the cost of replacement labour faced by the employer. We find direct empirical support for the assumptions in the model. Consistent with the model, because long-term absences entail replacement labour costs for HIM and non-HIM employers alike, long-term absences are independent of exposure to HIM.
    Date: 2011–10
  6. By: Mark Huggett (Department of Economics, Georgetown University); Greg Kaplan (Department of Economics, University of Pennsylvania)
    Abstract: This paper posits a notion of the value of an individual’s human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We decompose the value of human capital into a bond, a stock and a residual value component. We find that (1) the bond component of human capital is larger than the stock component at all ages, (2) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (3) mean human capital returns exceed stock returns early in life and decline with age and (4) human capital returns and stock returns have a small positive correlation over the working lifetime.
    Keywords: Value of Human Capital, Return on Human Capital, Asset Pricing, Idiosyncratic and Aggregate Risk
    JEL: D91 E21 G12 J24
    Date: 2012–04–03
  7. By: Alex Bryson; White, M.
    Abstract: The HRM-performance linkage often invokes an assumption of increased employee commitment to the organization and other positive effects of a motivational type. We present a theoretical framework in which motivational effects of HRM are conditional on its intensity, utilizing especially the idea of HRM ‘bundling’. We then analyse the association between HRM practices and employees’ organisational commitment (OC) and intrinsic job satisfaction (IJS). HRM practices have significantly positive relationships with OC and IJS chiefly at high levels of implementation, but with important distinctions between the domain-level analysis (comprising groups of practices for specific domains such as employee development) and the across-domain or HRM-system level. Findings support a threshold interpretation of the link between HRM domains and employee motivation, but at the system-level both incremental and threshold models receive some support.
    Date: 2011–10
  8. By: Acharya, Viral V; Gabarro, Marc; Volpin, Paolo
    Abstract: We propose a model in which better governance incentivizes managers to perform better and thus saves on the cost of providing pay for performance. However, when managerial talent is scarce, firms' competition to attract better managers reduces an individual firm's incentives to invest in corporate governance. In equilibrium, better managers end up at firms with weaker governance, and conversely, better-governed firms have lower-quality managers. Consistent with these implications, in a sample of US firms, we show that (i) better CEOs are matched to firms with weaker corporate governance and more so in industries with stronger competition for managers, and, (ii) corporate governance is more likely to change when there is CEO turnover, with governance weakening when the incoming CEO is better than the departing one.
    Keywords: corporate governance; executive compensation; externalities
    JEL: D82 G18 G21
    Date: 2012–04
  9. By: Christoph Helbach; Klemens Keldenich
    Abstract: This study uses a laboratory experiment to analyze the effectiveness of performance-based monetary incentives in the teaching process. The process of knowledge transmission is recreated using a video-stream. Four different teacher payment schemes are compared, three of which depend on the student‘s success. Furthermore, the experiment is done with two different subject pools: prospective teachers and regular students. Results indicate that prospective teachers do not react to monetary incentives in the given task. However, regular students do react in the expected way: Teachers transmit a significantly higher share of their knowledge when paid according to student performance.
    Keywords: Education; monetary incentives; video analysis
    JEL: C91 D03 I21 J33
    Date: 2012–04
  10. By: Josse Delfgaauw (Erasmus University Rotterdam); Robert Dur (Erasmus University Rotterdam, CESifo, IZA); Arjan Non (Erasmus University Rotterdam); Willem Verbeke (Erasmus University Rotterdam, ERIM)
    Abstract: We conduct a field experiment in a large retail chain to test basic predictions of tournament theory regarding prize spread and noise. A random subset of the 208 stores participates in two-stage elimination tournaments. Tournaments differ in the distribution of prize money across winners of the first and second round of the tournament. As predicted by theory, we find that a more convex prize spread increases performance in the second round at the expense of first-round performance, although the magnitude of these effects is small. Moreover, the treatment effect is significantly larger for stores that historically have relatively stable performance as compared to stores with more noisy performance.
    Keywords: Elimination tournaments; Incentives; Prize spread; Performance measurement; Field experiment
    JEL: C93 M51 M52
    Date: 2011–08–11
  11. By: Alex Bryson; John Forth; Zhou, M.
    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 anking in the Communist Party, and city-level clustering in the use of bonds are all consistent with
    Date: 2012–02
  12. By: Troisi, Roberta; Nese , Annamaria
    Abstract: The role of the cooperative credit banks in the European financial system is growing, particularly during the current period of financial crisis. Nevertheless, these cooperative banks have not received a great deal of attention from scholars. This lack of attention has resulted from two factors: i) the lack of empirical data and ii) the fact that the organizational structures and multiple goals of these cooperative banks are “generally more difficult to understand than the corporate governance of the commercial banks with their more easily interpretable and single goal of profit maximizing”(Groeneveld, 2011). This paper contributes to the understanding of Italian cooperative credit banks (Bccs) and their activity by describing their main characteristics and by providing a comparison with different cooperative bank models. Second, it analyzes the job satisfaction of Italian Bccs’ employees, which is a crucial factor because human resources, along with the Bccs’ unique structural elements, facilitate long-term relationships with the local communities where Bccs are located.
    Keywords: Non profit organizations; Workers' motivation; Firm Objectives;
    JEL: D21 L31 J54
    Date: 2012–01
  13. By: Tsuru, Tsuyoshi; Nakajima, Kentaro
    Abstract: Using data from a questionnaire survey focusing on firms from Japan, China, and South Korea, this paper empirically examines the complementarity between product architecture and human resource (HR) management. The results of the analysis can be summarized as follows. First, in Japan and Korea, firms were more or less evenly divided between those employing a modular and those employing an integral architecture. On the other hand, in China, more firms employed a modular architecture. Second, with regard to HR management practices and customs, there were differences in the emphasis of internal training of new graduates and the emphasis of mid-career recruitment. Japan and China are at the two extremes, with firms in the former tending to emphasize the recruitment of new graduates and firms in the latter emphasizing mid-career recruitment, while firms from Korea were in-between, but closer to Japan. Third, we found that, in Japan, development performance was significantly higher when product architecture and HR management were appropriately combined. However, we did not find such significant effect for the case of Korea and China. And fourth, we found that when we drop the assumption that the relationship between the combination of product architecture and HR management on the one hand and development performance on the other is linear and examine the non-linear effect of the former on the latter, both in Japan and Korea, the more that firms approach the best combination, the more their development performance increases.
    Date: 2012–03
  14. By: Girum Abebe (Ethiopian Development Research Institute, Ethiopia); Tetsushi Sonobe (National Graduate Institute for Policy Studies)
    Abstract: Many observational studies of micro and small enterprises have found that enterprise performance and education levels of entrepreneurs are positively associated. Does it follow that entrepreneurs’ management capacities depend on their academic achievements? This paper examines what types of entrepreneurs participated in a managerial training program held in Ethiopia, who benefited more from the program, and who had better management knowledge before the program. We find that highly educated entrepreneurs were more willing to learn about management, more knowledgeable about management, and gaining more from the training program, but that such simple relationships are missing among entrepreneurs operating larger enterprises.
    Keywords: Africa, Ethiopia, education, management practices, management training
    Date: 2012–03
  15. By: Vetter, Stefan
    Abstract: We study experimentally whether anti-corruption policies with a focus on bribery might be insufficient to uncover more subtle ways of gaining an unfair advantage. In particular, we investigate whether an implicit agreement to exchange favors between a decision-maker and a lobbying party serves as a legal substitute for corruption. Due to the obvious lack of field data on these activities, the laboratory provides an excellent opportunity to study this question. We find that even the pure anticipation of future rewards from a lobbying party suffices to bias a decision-maker in favor of this party, even though it creates negative externalities to others. Although future rewards are not contractible, the benefitting party voluntarily compensates decision-makers for partisan choices. In this way, both receive higher payoffs, but aggregate welfare is lower than without a rewards channel. Thus, the outcome mirrors what might have been achieved via conventional bribing, while not being illegal.
    Keywords: delegation; gift exchange; corruption; lobbying; negative externalities
    JEL: C91 D62 D63 D73 K42
    Date: 2012–04
  16. By: Mirta Diaz Fernandez; Mar Bornay Barrachina; Alvaro Lopez Cabrales (Department of Business Administration, Universidad Pablo de Olavide)
    Abstract: The purpose of this paper is to study the relationship between HR practices and innovative performance in the Spanish industry. Specifically, we will focus on innovativeness, measured through the production of patents, analyzing the extent to which this innovative result is favoured by some HRM practices as investments on training and whether it is also affected by the use of full time workers. We propose the assessment of these relationships by means of the Spanish Survey of Industrial Strategic Behaviour. We focus our longitudinal analysis on the period 2001-2008, years of high economic growth in Spain during the last decades. Our findings show that the most innovative firms are also the most competitive ones in terms of added value, and they also use full time workers. Finally, training investments on new technologies, languages and data processes have an impact on innovativeness. The paper is closed with a discussion about some lessons we may learn from these wealthy years and the role played by HRM investments on firms.
    Keywords: Innovativeness, HRM, Training, change environment.
    Date: 2012–04
  17. By: Rafael Morales Author-1-Name-First: Rafael Author-1-Name-Last: Morales (Department of Business Administration, Universidad Pablo de Olavide); Carmen Cabello Author-2-Name-First: Carmen Author-2-Name-Last: Cabello (Department of Business Administration, Universidad Pablo de Olavide)
    Abstract: This research conceptualizes ethical competencies as a factor that can help to improve the understanding of ethical decision-making process in organizations. The authors discuss some limitations of existing models that describe the components of the ethical decision-making process as well as the main factors influencing on it. To overcoming these limitations, the authors propose the concept of ethical competencies as the set of knowledge, skills, and abilities acquired by experience which facilitates the engagement in ethical behaviours that produce an excellent performance in a specific job. The paper theoretically addresses how ethical competencies can influence each component of the ethical decision making process. In addition, the benefits of ethical behaviour for both individuals and organizations are discussed. Finally, some interesting managerial implications are also addressed.
    Keywords: Ethical decision-making process. Ethical competencies. Individual and Organizational Benefits. Ethical / unethical behaviour. Competencies.
    Date: 2012–04
  18. By: Owens, David; Grossman , Zachary; Fackler , Ryan
    Abstract: We document a lower bound for thecontrol premium: agents' willingness to pay to control their own payoff. Participants choose between an asset that will pay only if they later answer a particular quiz question correctly and one that pays only if their partner answers a different question correctly.  However, they first estimate the likelihood that each asset will pay off.  Participants are 20% more likely to choose to control their payoff than a group of payoff-maximizers with accurate beliefs.  While some of this deviation is explained by overconfidence, 34% of it can only be explained by the control premium.  The average participant expresses a control premium equivalent to 8% to 15% of the expected asset-earnings.  Our results show that even agents with accurate beliefs may incur costs to avoid delegating and suggest that to correctly infer beliefs from choices, one should account for the control premium.
    Keywords: Economics, experiment, principal-agent, overconfidence, control premium, desire for control, control, Delegation
    Date: 2012–03–14

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