nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒04‒23
nineteen papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. A back-door brain drain By Stark, Oded; Byra, Lukasz
  2. The Role of Salience in Performance Schemes: Evidence from a Field Experiment By Englmaier, Florian; Roider, Andreas; Sunde, Uwe
  3. Quitting and Peer Effects at Work By Rosaz, Julie; Slonim, Robert; Villeval, Marie Claire
  4. Repeated Selection with Heterogenous Individuals and Relative Age Effects By Dawid, Herbert; Muehlheusser, Gerd
  5. Human Capital, Innovation, and Climate Policy: An Integrated Assessment By Carlo Carraro; Enrica De Cian; Massimo Tavoni
  6. The Effects of Prize Spread and Noise in Elimination Tournaments: A Natural Field Experiment By Delfgaauw, Josse; Dur, Robert; Non, Arjan; Verbeke, Willem
  7. The Role of Performance Appraisals in Motivating Employees By Jurjen J.A. Kamphorst; Otto H. Swank
  8. All in transition - Human resource management and labour relations in the Chinese industrial sector By Yu, Nan
  9. The Intergenerational Persistence of Human Capital: An Empirical Analysis of Four Generations By Lindahl, Mikael; Palme, Mårten; Sandgren Massih, Sofia; Sjögren, Anna
  10. Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers By Joseph G. Altonji; Erica Blom; Costas Meghir
  11. Pro-Social Missions and Worker Motivation: An Experimental Study By Fehrler, Sebastian; Kosfeld, Michael
  12. Explicit versus Implicit Contracts for Dividing the Benefits of Cooperation By Marco Casari; Timothy N. Cason
  13. Human resource management and labour relations in post-transitional Russia By Shulzhenko, Elena
  14. The interaction of explicit and implicit contracts: A signaling approach By Gürtler, Marc; Gürtler, Oliver
  15. Exports and Wages: Rent Sharing, Workforce Composition or Returns to Skills? By Macis, Mario; Schivardi, Fabiano
  16. On involuntary unemployment: notes on efficiency-wage competition By Guerrazzi, Marco
  17. An analysis of correlation between organizational justice and job satisfaction By Yaghoubi, Esmaeil; Ahmadzadeh Mashinchi , Sina; Ebrahimi, Ahmad; Abdollahi, Hadi; Ebrahimi, Hamid
  18. Link between Pay for Performance Incentives and Physician Payment Mechanisms: Evidence from the Diabetes Management Incentive in Ontario By Kantarevic, Jasmin; Kralj, Boris
  19. Human resource management and labour relations in the Indian industrial sector By Rai, Soumi

  1. 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
    JEL: F22 J24 O15
    Date: 2012
  2. By: Englmaier, Florian (University of Würzburg); Roider, Andreas (University of Heidelberg); Sunde, Uwe (University of St. Gallen)
    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: incentives, attention, salience, communication, field experiments
    JEL: M52 J30 D03 D80
    Date: 2012–03
  3. By: Rosaz, Julie (University of Montpellier 1); Slonim, Robert (University of Sydney); Villeval, Marie Claire (CNRS, GATE)
    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: 2012–04
  4. By: Dawid, Herbert (University of Bielefeld); Muehlheusser, Gerd (University of Hamburg)
    Abstract: In contexts such as education and sports, skill-accumulation of individuals over time crucially depends on the amount of training they receive, which is often allocated on the basis of repeated selection. We analyze optimal selection policies in a model of endogenous skill formation where, apart from their ability to transform training into skills, individuals also differ with respect to relative age. The latter has been identified by recent empirical research as a major determinant for performance differentials within cohorts. We find that the optimal policy is pro-competitive at later selection stages in the sense of selecting the individuals with the higher skill signals. All eventual corrections due to relative age occur at early stages, where selection is either counter-competitive (i.e. individuals with low skill signals are selected) or even avoided at all. Thereby, the induced selection quality is non-monotone in the degree of ex-ante asymmetry due to relative age. Finally, the (empirical) observation of persistent relative age effects does in general not hint at suboptimal selection policies.
    Keywords: skill formation, human capital, selection, heterogeneity, age effects, training, education
    JEL: J24 M53 I25 I28
    Date: 2012–04
  5. By: Carlo Carraro (University of Venice, Fondazione Enrico Mattei, CEPR, CESifo and CMCC); Enrica De Cian (Fondazione Enrico Mattei and CMCC); Massimo Tavoni (Fondazione Enrico Mattei and CMCC)
    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 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, Innovation, Human capital
    JEL: O33 O41 Q43
    Date: 2012–03
  6. By: Delfgaauw, Josse (Erasmus University Rotterdam); Dur, Robert (Erasmus University Rotterdam); Non, Arjan (ROA, Maastricht University); Verbeke, Willem (Erasmus University Rotterdam)
    Abstract: We conduct a natural 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: 2012–04
  7. By: Jurjen J.A. Kamphorst (Erasmus University Rotterdam); Otto H. Swank (Erasmus University Rotterdam)
    Abstract: In many organizations, reward decisions depend on subjective performance evaluations. However, evaluating an employee's performance is often difficult. In this paper, we develop a model in which the employee is uncertain about his own performance and about the manager's ability to assess him. The manager gives an employee a performance appraisal with a view of affecting the employee's self perception, and the employee's perception of the manager's ability to assess performance. We examine how performance appraisals affect the employee's future performance. The predictions of our model are consistent with various empirical findings. These comprise (i) the observation that managers tend to give positive appraisals, (ii) the finding that on average positive appraisals motivate more than negative appraisals, and (iii) the observation that the effects of appraisals depend on the employee's perception of the manager's ability to assess performance accurately.
    Keywords: Subjective Performance Appraisal; Credibility; Cheap Talk
    JEL: M52 M54 D82 D83
    Date: 2012–04–10
  8. By: Yu, Nan
    Abstract: This discussion paper is a literature study reviewing the development of human resource management in China, with a particular focus (where possible) on the automobile industry. It presents the Chinese context for HRM discussing the normative debate about the adaptation of Western management methods and the heritage of Chinese philosophy and values, and it describes the economic, cultural, and transition-specific factors which influence HRM in China. In more detail, the paper deals with work organization analyzing to which extent companies transfer Western work organization systems to China and describing Chinese concepts of teamwork and leadership. As to personal development, it deals with Chinese approaches to recruitment and career systems also describing the debate about skill formation in the Chinese industry. Wage and incentive systems in China are analyzed, and the system of employee interest representation in China and the role of the All-China Federation of Trade Unions are presented. --
    Date: 2012
  9. By: Lindahl, Mikael (Uppsala University); Palme, Mårten (Stockholm University); Sandgren Massih, Sofia (Uppsala University); Sjögren, Anna (IFAU)
    Abstract: Most previous studies of intergenerational transmission of human capital are restricted to two generations – parents and their children. In this study we use a Swedish data set which enables us link individual measures of lifetime earnings for three generations and data on educational attainments of four generations. We investigate to what extent estimates based on income data from two generations accurately predicts earnings persistence beyond two generations. We also do a similar analysis for intergenerational persistence in educational attainments. We find two-generation studies to severely under-predict intergenerational persistence in earnings and educational attainment over three generations. Finally, we use our multigenerational data on educational attainment to estimate the structural parameters in the Becker-Tomes model. Our results suggest a small or no causal effect of parental education on children's educational attainment.
    Keywords: multigenerational income mobility, human capital transmission, intergenerational income mobility
    JEL: D31 J62
    Date: 2012–04
  10. By: Joseph G. Altonji; Erica Blom; Costas Meghir
    Abstract: Motivated by the large differences in labor market outcomes across college majors, we survey the literature on the demand for and return to high school and post-secondary education by field of study. We combine elements from several papers to provide a dynamic model of education and occupation choice that stresses the roles of specificity of human capital and uncertainty about preferences, ability, education outcomes, and labor market returns. The model implies an important distinction between the ex ante and ex post returns to education decisions. We also discuss some of the econometric difficulties in estimating the causal effects of field of study on wages in the context of a sequential choice model with learning. Finally, we review the empirical literature on choice of curriculum and the effects of high school courses and college major on labor market outcomes.
    JEL: I21 J24
    Date: 2012–04
  11. By: Fehrler, Sebastian (University of Zurich); Kosfeld, Michael (Goethe University Frankfurt)
    Abstract: Do employees work harder if their job has the right mission? In a laboratory labor market experiment, we test whether subjects provide higher effort if they can choose the mission of their job. We observe that subjects do not provide higher effort than in a control treatment. Surprised by this finding, we run a second experiment in which subjects can choose whether they want to work on a job with their preferred mission or not. A subgroup of agents (roughly one third) is willing to do so even if this option is more costly than choosing the alternative job. Moreover, we find that these subjects provide substantially higher effort. These results suggest that relatively few workers can be motivated by missions and that selection into mission-oriented organizations is important to explain empirical findings of lower wages and high motivation in the latter.
    Keywords: motivation, effort provision, contract choice, sorting, lab experiment
    JEL: C92 J33 M52
    Date: 2012–04
  12. By: Marco Casari; Timothy N. Cason
    Abstract: Experimental evidence has accumulated highlighting the limitations of formal and explicit contracts in certain situations, and has identified environments in which informal and implicit contracts are more efficient. This paper documents the superior performance of explicit over implicit contracts in a new partnership environment in which both contracting parties must incur effort to generate a joint surplus, and one (“strong”) agent controls the surplus division. In the treatment in which the strong agent makes a non-binding, cheap talk “bonus” offer to the weak agent, this unenforceable promise doubles the rate of joint high effort compared to a baseline with no promise. The strong agents most frequently offered to split the gains of the high effort equally, but actually delivered this amount only about onequarter of the time. An explicit and enforceable contract offer performs substantially better, increasing the frequency of the most efficient outcome by over 200 percent relative to the baseline.
    Keywords: Experiments; laboratory; social preferences; inequity aversion; reciprocity; trust.
    JEL: C70 D03
    Date: 2012–04
  13. By: Shulzhenko, Elena
    Abstract: The paper discusses the role of the personnel function as described in the research literature before the background of the particular characteristics of the Russian HR conditions which have evolved during the transition period. It describes the characteristics of wage and incentive systems in Russian private enterprises, of personnel development systems, and of work organisation on the shop floor. Leadership styles and work- behaviour and work values are discussed as well as industrial relations literature dealing with the role of unions and of collective bargaining and with the perception of trade unions by employees. It ends with a brief summary and some conclusions. --
    Date: 2012
  14. By: Gürtler, Marc; Gürtler, Oliver
    Abstract: We analyze the interaction of explicit and implicit contracts in a model with selfish and fair principals. Fair principals are willing to honor implicit agreements, whereas selfish principals are not. Principals are privately informed about their types. We investigate a separating equilibrium in which principals reveal their type through the contract o er to the agent. If this equilibrium is played, explicit and implicit contracts are substitutes. Since the agent learns the principal's type, a selfish principal has to rely on explicit incentives. A fair principal, by contrast, can effectively induce implicit incentives and hence does not need to use explicit incentives. Interestingly, if a selfish principal can rely on more effective explicit incentives, a fair principal becomes more likely to be able to separate from the selfish type and, hence, to make better use of implicit incentives. In this sense, there is a strategic complementarity between explicit and implicit incentives. --
    Keywords: explicit contracts,implicit contracts,separating equilibrium,substitutes,strategic,complementarity
    JEL: D82 D86 M52
    Date: 2012
  15. By: Macis, Mario (Johns Hopkins University); Schivardi, Fabiano (University of Cagliari)
    Abstract: We use linked employer-employee data from Italy to explore the relationship between exports and wages. Our empirical strategy exploits the 1992 devaluation of the Italian Lira, which represented a large and unforeseen shock to Italian firms' incentives to export. The results indicate that the export wage premium is due to exporting firms both (1) paying a wage premium above what their workers would earn in the outside labor market – the "rent-sharing" effect, and (2) employing workers whose skills command a higher price after the devaluation – the "skill composition" effect. The latter effect only emerges once we allow for the value of individual skills to differ in the pre- and post-devaluation periods. In fact, using a fixed measure of skills, as typically done in the literature, we would attribute the wage increase only to rent sharing. We also document that the export wage premium is larger for workers with more export-related experience. This indicates that the devaluation increased the demand for skills more useful for exporting, driving their relative price up.
    Keywords: export wage premium, linked employer employee data, exports, wages, returns to skills, rent sharing
    JEL: F16 J31
    Date: 2012–04
  16. By: Guerrazzi, Marco
    Abstract: This paper introduces a model of efficiency-wage competition along the lines put forward by Hahn (1987). Specifically, I analyse a two-firm economy in which employers screen their workforce by means of increasing wage offers competing one another for high-quality employees. The main results are the following. First, using a specification of effort such that the problem of firms is concave, optimal wage offers are strategic complements. Second, a symmetric Nash equilibrium can be locally stable under the assumption that firms adjust their wage offers in the direction of increasing profits by conjecturing that any wage offer above (below) equilibrium will lead competitors to underbid (overbid) such an offer. Finally, the exploration of possible labour market equilibria reveals that effort is counter-cyclical.
    Keywords: Efficiency-Wages; Wage Competition; Nash Equilibria; Effort
    JEL: E12 E24 J41 C72
    Date: 2012
  17. By: Yaghoubi, Esmaeil; Ahmadzadeh Mashinchi , Sina; Ebrahimi, Ahmad; Abdollahi, Hadi; Ebrahimi, Hamid
    Abstract: This study was an attempt to explore the relationship between organizational justice, encompassed by three components: (distributive justice, procedural justice and interactional justice) job satisfaction, that is employees’ perceptions of workplace justice. This study, indeed, investigated the relationship among these justice measures in the Iranian environment. The data were collected through the distribution of questionnaires among 229 employees of Furniture Manufacturing Company through a stratified random sampling. The study findings showed that only one significant relationship existed between the age of respondents and their perceptions of organizational justice. The findings also suggested that this was a positive association organizational justice and job satisfaction. Employee job satisfaction depended upon the organizational justice of managers. Nevertheless, in measuring the three dimensions of organizational justice, the current study used survey items asking employees whether something is generally fair or not. Finally, although, this study was conducted in Iran, it was expected that the findings might have the relevance on a broader scale. The results could be very helpful for developing a new model of organizational justice with new implementation techniques by replicating this study in different countries and contexts.
    Keywords: job satisfaction; justice; furniture manufacturing company
    JEL: D21 D2 D63 J24 J2 D23 L2 K4
    Date: 2011–10–26
  18. By: Kantarevic, Jasmin (Ontario Medical Assocation); Kralj, Boris (Ontario Medical Assocation)
    Abstract: Pay for performance (P4P) incentives for physicians are generally designed as additional payments that can be paired with any existing payment mechanism such as salary, fee-for-service, and capitation. However, the link between the physician response to performance incentives and the existing payment mechanisms is still not well understood. In this paper, we study this link using the recent primary care reform in Ontario as a natural experiment and the Diabetes Management Incentive (DMI) as a case study. Using a comprehensive administrative data and a difference-indifferences matching strategy, we find that physicians in a blended capitation model are more responsive to the DMI than physicians in an enhanced fee-for-service model. We show that for a given payment mechanism this result implies that the optimal size of P4P incentives varies negatively with the degree of supply-side cost sharing. These results have important implications for the design of P4P programs and the cost of their implementation.
    Keywords: pay for performance, physician remuneration, diabetes management
    JEL: I10 I12 I18
    Date: 2012–04
  19. By: Rai, Soumi
    Abstract: This paper addresses gaps in research related to study and understanding of Human Resource Management in the context of Indian Automobile sector. The review is based on the available and published literature in peer reviewed journals of reputation and academic standing. A total of 138 papers were reviewed related to the general context of Human Resource Management practices. Of these, about 65 papers were found relevant and relating to understanding of HRM practices in India specifically in the context of the industrial sector. The timeline for literature review has been taken from 1970 - 2010, as it encompasses the period of industrialization in India, growth of HRM and major transition across Indian industrial sector post economic liberalization - 1991. --
    Date: 2012

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