nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒05‒08
thirteen papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Whither Human Capital? The Woeful Tale of Transition to Tertiary Education in India By Sumon Bhaumik; Manisha Chakrabarty
  2. The roles of incentives and voluntary cooperation for contractual compliance By Simon Gaechter; Esther Kessler; Manfred Koenigstein
  3. Dynamic Moral Hazard, Learning and Belief Manipulation By Bhaskar, Venkataraman
  4. To reward the best or to punish the worst? A comparison of two tournament mechanisms with heterogeneous agents By Loukas Balafoutas; Glenn Dutcher; Florian Lindner; Dmitry Ryvkin
  5. A New Approach to Measuring the Gap between Marginal Productivity and Wages of Workers By KODAMA Naomi; ODAKI Kazuhiko
  6. The Effect of Early Entrepreneurship Education: Evidence from a Randomized Field Experiment By Rosendahl Huber, Laura; Sloof, Randolph; van Praag, Mirjam
  7. Works Councils, Collective Bargaining and Apprenticeship Training By Kriechel, Ben; Mühlemann, Samuel; Pfeifer, Harald; Schuette, Miriam
  8. Peer Effects and Social Preferences in Voluntary Cooperation By Christian Thoeni; Simon Gaechter
  9. Span of Control and Span of Activity By Oriana Bandiera; Andrea Prat; Raffaella Sadun; Julie Wulf
  10. Problem-based learning in secondary education: Evaluation by a randomized experiment By De Witte, Kristof; Rogge, Nicky
  11. To Group or Not to Group? Evidence from Mutual Funds By patel, saurin; sarkissian, sergei
  12. The Wage Incentive to Management: A Comparison across European Economies By Marco Biagetti; Leone Leonida; Sergio Scicchitano
  13. Workplace Bullying, Power and Organizational Politics: A study of the Portuguese Banking sector By Ana Teresa Verdasca

  1. By: Sumon Bhaumik; Manisha Chakrabarty
    Abstract: In this paper we examine the issue of high dropout rates in India which has adverse implications for human capital formation, and hence for the country’s long term growth potential. Using the 2004-05 National Sample Survey employment-unemployment survey data, we estimate transition probabilities of moving from a number of different educational levels to higher educational levels using a sequential logit model. Our results suggest that the overall probability of reaching tertiary education is very low. Further, even by the woeful overall standards, women are significantly worse-off, particularly in rural areas.
    Keywords: Education; Transitional probability; India
    JEL: I21
    Date: 2011–07–01
  2. By: Simon Gaechter (University of Nottingham); Esther Kessler (University College London); Manfred Koenigstein (Universitaet Erfurt)
    Abstract: Efficiency under contractual incompleteness often requires voluntary cooperation in situations where self-regarding incentives for contractual compliance are present as well. Here we provide a comprehensive experimental analysis based on the gift-exchange game of how explicit and implicit incentives affect cooperation. We first show that there is substantial cooperation under non-incentive compatible contracts. Incentive-compatible contracts induce best-reply effort and crowd out any voluntary cooperation. Further experiments show that this result is robust to two important variables: experiencing Trust contracts without any incentives and implicit incentives coming from repeated interaction. Implicit incentives have a strong positive effect on effort only under non-incentive compatible contracts.
    Keywords: principal-agent games; gift-exchange experiments; incomplete contracts, explicit incentives; implicit incentives; repeated games; separability; experiments
    JEL: C70 C90
    Date: 2011–06
  3. By: Bhaskar, Venkataraman
    Abstract: We study dynamic moral hazard, with symmetric ex ante uncertainty and learning. Unlike Holmstrom's career concerns model, uncertainty pertains to the difficulty of the job rather than the general talent of the agent, so that contracts are required to provide incentives. Since effort is privately chosen, the agent can always cause a misalignment of beliefs between the principal and himself, by shirking. We show that such a misalignment is always profitable for the agent, and must be dissuaded by providing more high powered incentives. However, high powered incentives in the future only aggravate the incentive problem today, so that the problem is compounded as the interaction becomes longer. We also study the benefits of long term contracts with full commitment, and the role of random effort choice.
    Keywords: learning; moral hazard
    JEL: D83 D86
    Date: 2012–04
  4. By: Loukas Balafoutas; Glenn Dutcher; Florian Lindner; Dmitry Ryvkin
    Abstract: Tournaments are widely used in organizations, explicitly or implicitly, to reward the best-performing employees, e.g., through promotion or bonuses, and to punish the worst-performing employees, e.g., through firing or unfavorable job assignments. We use a principal-agent model to compare the efficiency of two tournament incentive schemes, reward tournament and punishment tournament, which, respectively, reward the best performer and punish the worst performer. We show that while the two schemes are equivalent when agents are symmetric in their ability, the equivalence is broken in the presence of heterogeneity. Specifically, punishment tournaments lead to higher profits of the firm. The reason is that low-ability agents are discouraged less in punishment tournaments than in reward tournaments, and hence can be compensated less to meet their participation constraints. Hence, our results predict that firms using punishment tournament contracts will perform better.
    Keywords: tournament, reward, punishment, contract, heterogeneous agents
    Date: 2012–04
  5. By: KODAMA Naomi; ODAKI Kazuhiko
    Abstract: The idea that the productivity and wages of workers are not necessarily equal has long attracted the attention of many economists. Indeed, the lack of a method to measure the productivity-wage gap has hindered the development of research on labor economics, productivity analysis, and human capital study. This paper proposes a new empirical method to measure the gap between the value of a worker's marginal product (VMP) and wage. We first define this gap. The method then aggregates the Mincer-type function of each worker's human capital service to obtain the total labor input of a firm. The semi-log form of total labor input can be inserted into Cobb-Douglas and trans-log type production functions and enable expressing of the production function as a linear form of gap parameters. This linear functional form of production function, if applied to employer-employee matched panel data, can control for firm-level productivity differences that would otherwise cause biases in estimating the gap coefficients. We apply the new method to Japanese employee-employer matched panel data and find that the gap between the VMP and wage is not so large. The traditional way of measurement, in which wage acts as a proxy of worker productivity, could be a rough approximation.
    Date: 2012–05
  6. By: Rosendahl Huber, Laura (University of Amsterdam); Sloof, Randolph (University of Amsterdam); van Praag, Mirjam (University of Amsterdam)
    Abstract: The aim of this study is to analyze the effectiveness of early entrepreneurship education. To this end, we conduct a randomized field experiment to evaluate a leading entrepreneurship education program that is taught worldwide in the final grade of primary school. We focus on pupils' development of relevant skill sets for entrepreneurial activity, both cognitive and non-cognitive. The results indicate that cognitive entrepreneurial skills are unaffected by the program. However, the program has a robust positive effect on non-cognitive entrepreneurial skills. This is surprising since previous evaluations found zero or negative effects. Because these earlier studies all pertain to education for adolescents, our result tentatively suggests that non-cognitive entrepreneurial skills are best developed at an early age.
    Keywords: skill formation, field experiment, entrepreneurship education, entrepreneurship
    JEL: L26 I21 J24 C93
    Date: 2012–04
  7. By: Kriechel, Ben (ROA, Maastricht University); Mühlemann, Samuel (University of Bern); Pfeifer, Harald (BIBB); Schuette, Miriam (BIBB)
    Abstract: In this paper, we investigate the effects of works councils on apprenticeship training in Germany. The German law attributes works councils substantial information and co-determination rights to training-related issues. Thus, works councils may also have an impact on the cost-benefit relation of workplace training. Using detailed firm-level data containing information on the costs and benefits of apprenticeship training, we find that firms with works councils make a significantly higher net investment in training compared with firms without such an institution. We also find that the fraction of former trainees still employed with the same firm five years after training is significantly higher in the presence of works councils, thus enabling firms to recoup training investments over a longer time horizon. Furthermore, all works council effects are much more pronounced for firms covered by collective bargaining agreements.
    Keywords: works councils, collective bargaining agreement, apprenticeship training, firm-sponsored training
    JEL: J24 J50 M53
    Date: 2012–04
  8. By: Christian Thoeni (University of St.Gallen); Simon Gaechter (University of Nottingham)
    Abstract: Substantial evidence suggests the behavioral relevance of social preferences and also the importance of social influence effects (“peer effects”). Yet, little is known about how peer effects and social preferences are related. In a three-person gift-exchange experiment we find causal evidence for peer effects in voluntary cooperation: agents’ efforts are positively related despite the absence of material payoff interdependencies. We confront this result with major theories of social preferences which predict that efforts are unrelated, or negatively related. Some theories allow for positively-related efforts but cannot explain most observations. Conformism, norm following and considerations of social esteem are candidate explanations.
    Keywords: social preferences, voluntary cooperation, peer effects, reflection problem, gift-exchange; conformism; social norms; social esteem
    JEL: C92 D03
    Date: 2011–09
  9. By: Oriana Bandiera; Andrea Prat; Raffaella Sadun; Julie Wulf
    Abstract: For both practitioners and researchers, span of control plays an important role in defining and understanding the role of the CEO. In this paper, we combine organizational chart information for a sample of 65 companies with detailed data on how their CEOs allocate their work time, which we define as their span of activity. Span of activity provides a direct measure of the CEO's management style, including the attention devoted to specific subordinates and functions, the time devoted to individual work and outside constituencies, a preference for multilateral or bilateral interaction, the degree of planning, etc. We find that CEOs with a larger number of reports spend more time with subordinates, more time on large meetings, less time on unplanned activities. The presence of a delegate, such as the COO, allows the CEO to reduce the time spent with insiders and to focus on bilateral and unplanned activities. These results suggest that time-use information is helpful in interpreting how span of control determines management style.
    Keywords: Management, firms, CEO, productivity, firm activities
    JEL: C21 C25 L22 L23
    Date: 2012–04
  10. By: De Witte, Kristof (KULeuven, Maastricht Universiteit); Rogge, Nicky (Hogeschool-Universiteit Brussel (HUB))
    Abstract: The effectiveness of problem based learning (PBL) in terms of increasing student knowledge and skills has been extensively studied for higher education students and in non-experimental settings. This paper tests the effectiveness of PBL as an alternative instruction method in secondary education. In a controlled randomized experiment, we estimate its effect on tested student attainments, on perceived student attainments, on autonomous and controlled motivation and on class atmosphere. The outcomes indicate a non-significant negative effect on student achievements, a non-significant effect on motivation and a significant positive effect on class atmosphere.
    Keywords: Problem-based learning; Secondary education; Student achievements; Student motivation;Classroom social climate; Randomized experiment
    Date: 2012–02
  11. By: patel, saurin; sarkissian, sergei
    Abstract: The literature has conflicting reports regarding the impact of group decision making on performance. We first observe that in mutual fund studies this results from large discrepancies in reported managerial structures between CRSP and Morningstar databases reaching on average 20% per year. Then we show that with more superior Morningstar data team-managed funds exhibit higher risk-adjusted returns than single-managed funds. The performance spread is present across all fund categories, except aggressive funds, and is robust to the inclusion of fund- and manager-level controls. Across various managerial structures, the largest team-induced gains are reached among funds managed by three individuals. Furthermore, teams significantly improve fund performance when funds are located in financial centers, reflecting larger networking potential and/or better skills of people who reside in larger cities. This improvement is achieved in teams more homogeneous in age and education. In spite of higher returns however, team-managed funds are not riskier than single-managed funds in terms of market exposure or idiosyncratic volatility. Finally, team-managed funds trade less aggressively and are able to generate extra inflows for their funds. Thus, collective decision making is beneficial, but its scale depends on team size and diversity as well as its geographic location.
    Keywords: Knowledge spillover; Management structure; Performance evaluation; Team diversity
    JEL: G23 J24
    Date: 2012–04–20
  12. By: Marco Biagetti (Ministry of Economic Development, Rome); Leone Leonida (Queen Mary, University of London); Sergio Scicchitano (Ministry of Economic Development, Rome)
    Abstract: We define the wage incentive to management as the wage premium the manager earns because of his/her supervising role. We adopt an approach based on what if questions and estimate the premium at different quantiles of the distribution of wages for 26 European economies. To ease comparisons we make use of the European Union Statistics on Income and Living Conditions inquiry released in 2009. The premium is found to be higher at the right tail of the distribution of wages, suggesting that the incentive to management differs across individuals at different quantiles of the distribution within each economy. Results also suggest that the premium differs across individuals located at the same quantiles of the distribution of different economies.
    Keywords: Distribution of wages, Incentives to management, Semiparametric methods
    JEL: C14 J31 J41
    Date: 2012–01
  13. By: Ana Teresa Verdasca
    Abstract: This paper tries to shed light about the political dimension of workplace bullying through the quantitative analysis of work environment factors, like perceptions of organizational politics, work overload and internal competition, and the qualitative analysis of accounts of respondents to a questionnaire launched in the Portuguese banking sector. Our sample is made up of 561 valid responses containing 64 stories of bullying episodes and, in the qualitative data, political behaviours occur associated with organizational practices, perceived as bullying, which may reinforce the connexion between political behaviours and workplace bullying. The organizational practices indentified were: “Being left idle”, “The denying of promotion” and “Staff Appraisal for Performance”. A deeper analysis of power was carried out to identify the main sources of power (reward, coercive, legitimate, expert and reference) embedded in accounts of bullying behaviours. The main sources of power identified were coercive and negative reward power. These results reinforce the previous findings about the power dimension of bullying and open new directions for future research concerning the different sources of power behind bullying behaviours.
    Keywords: bullying, power, political behaviour
    Date: 2012–02

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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