nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒07‒08
seven papers chosen by
Tommaso Reggiani
University of Cologne

  1. The behavioralist goes to school: Leveraging behavioral economics to improve educational performance By Levitt, Steven D.; List, John A.; Neckermann, Susanne; Sado, Sally
  2. The intergenerational persistence of human capital: an empirical analysis of four generations By Lindahl, Mikael; Palme, Mårten; Sandgren Massih, Sofia; Sjögren, Anna
  3.  The Temptation of Social Ties: When Interpersonal Network Transactions Hurt Firm Performance By  Leif Brandes;  Marc Brechot;  Egon Franck
  4. Long-term Impacts of Rice Price and Production Seasonality on Human Capital: Evidence from Rural Indonesia By Yamauchi, Futoshi
  5. Is it better to say goodbye? When former executives set executive pay By Andres, Christian; Fernau, Erik; Theissen, Erik
  6. Does Performance-Based Pay Improve Teaching? By OECD
  7. Employer sanctions, and the welfare of native workers By Stark, Oded; Jakubek, Marcin

  1. By: Levitt, Steven D.; List, John A.; Neckermann, Susanne; Sado, Sally
    Abstract: Decades of research on behavioral economics have established the importance of factors that are typically absent from the standard economic framework: reference dependent preferences, hyperbolic preferences, and the value placed on non-financial rewards. To date, these insights have had little impact on the way the educational system operates. Through a series of field experiments involving thousands of primary and secondary school students, we demonstrate the power of behavioral economics to influence educational performance. Several insights emerge. First, we find that incentives framed as losses have more robust effects than comparable incentives framed as gains. Second, we find that non-financial incentives are considerably more cost-effective than financial incentives for younger students, but were not effective with older students. Finally, and perhaps most importantly, consistent with hyperbolic discounting, all motivating power of the incentives vanishes when rewards are handed out with a delay. Since the rewards to educational investment virtually always come with a delay, our results suggest that the current set of incentives may lead to underinvestment. For policymakers, our findings imply that in the absence of immediate incentives, many students put forth low effort on standardized tests, which may create biases in measures of student ability, teacher value added, school quality, and achievement gaps. --
    Keywords: educational economics,behavioral economics,field experiment
    Date: 2012
  2. By: Lindahl, Mikael (Department of Economics, Uppsala University); Palme, Mårten (Department of Economics, Stockholm University); Sandgren Massih, Sofia (Department of Economics, Uppsala University); Sjögren, Anna (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    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: Intergenerational income mobility; Human capital transmission; Multigenerational income mobility
    JEL: D31 J62
    Date: 2012–06–08
  3. By:  Leif Brandes (Department of Business Administration, University of Zurich);  Marc Brechot (Department of Business Administration, University of Zurich);  Egon Franck (Department of Business Administration, University of Zurich)
    Abstract: We introduce agency concerns to social capital theory and predict that managers can use individual social capital to reduce personal effort costs, which is not in the best interest of the firm. To test this prediction, we collect data on all 8,019 hiring decisions from general managers in the National Basketball Association between 1981 and 2011. We find that managers have a clear preference for hiring players through social ties. The probability that a manager hires players from an NBA franchise to which he is socially tied is 27.6% higher than for an untied franchise. To isolate the motivation for this behavior, we complement our data with information on the sporting performance of teams. In line with agency theory, we find that the hiring of players through social ties reduces team performance. The effect is large: on average, each social-tie player reduces team winning percentage by 5.4%. Overall, this paper documents first empirical evidence that decision makers’ use of individual social capital can lead to reduced firm-level performance.  
    Keywords: Social Networks, Social Capital, Principal-Agent-Relationship, Worker Allocation, Basketball
    Date: 2012
  4. By: Yamauchi, Futoshi
    Abstract: This paper examines the impacts of prenatal conditions on child growth using recent data from Indonesia. There is seasonality in birthweight: This measure is significantly higher immediately after the main rice harvest in the country. The empirical results show that an increase in birthweight improves child growth outcomes as measured by the height and weight z-scores, as well as schooling performance as measured by age at start of schooling and number of grades repeated. The interactions of ecological variations affect early childhood human capital formation and can have long-term impacts on children’s outcomes.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics, Crop Production/Industries, Demand and Price Analysis, Labor and Human Capital, Production Economics,
    Date: 2012–08
  5. By: Andres, Christian; Fernau, Erik; Theissen, Erik
    Abstract: In the German two-tiered system of corporate governance, it is common practice for chief executive officers (CEOs) to become the chairman of the supervisory board of the same company upon retirement. As members of the supervisory board, they are involved in setting the pay for their successors as well as for their former colleagues. We analyze a panel covering 150 listed firms and the period 1998-2007. We show that firms in which a former CEO serves as the chairman of the board of directors pay their executives significantly more. We find no difference in the compensation for the members of the supervisory board. Thus, former CEOs apparently exert their influence to increase the pay of their former colleagues and their successor, but not their own pay. --
    Keywords: executive compensation,board structure,two-tiered board
    JEL: G30 G38
    Date: 2012
  6. By: OECD
    Abstract: PISA has long established that high-performing education systems tend to pay their teachers more. They also often prioritise the quality of teaching over other choices, including class size. But in the current budgetary climate, paying everybody more may not be a viable alternative. So many countries are now targeting salary increases to schools with particular needs or short supplies of teachers, or have developed greater local flexibility in salary schemes. Some countries have responded with systems of individual pay. But is recognising and rewarding teaching performance through pay an effective way to leverage improvement?
    Date: 2012–05
  7. By: Stark, Oded; Jakubek, Marcin
    Abstract: We investigate the impact of the imposition of sanctions for employing illegal migrants on the welfare of native workers. Our analysis is based on the premise that in response to such sanctions, managers in a firm may be reassigned from supervision of production to verification of the legality of the firm's workforce. When there is full employment in the host country, a profit-maximizing firm will assign managers to verification if the sanctions are steep enough. This reassignment impedes production efficiency and, consequently, leads to a reduction in the wages of both illegal migrants and native workers, inevitably hurting the latter, who are the intended beneficiaries of the sanctions. --
    Keywords: Employer sanctions,Illegal migrant workers,Natives' welfare,The formation of public policy
    JEL: D21 I38 J21 J61 K31 L51
    Date: 2012

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