nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒07‒23
seventeen papers chosen by
Tommaso Reggiani
University of Cologne

  1. The Tenuous Relationship between Effort and Performance Pay By Kvaløy, Ola; Olsen, Trond E.
  3. Peer Effects, Cooperation and Competition in Human Capital Formation By Román Andrés Zárate
  4. Self-Employment after Socialism: Intergenerational Links, Entrepreneurial Values, and Human Capital By Michael Fritsch; Alina Rusakova
  5. Incentives to Motivate By Kvaløy, Ola; Schöttner, Anja
  6. Family background, self-confidence and economic outcomes By Antonio Filippin; Marco Paccagnella
  7. Environmental Compliance and Human Capital: Evidence from Chinese Industrial Firms By Jing Lan; Alistair Munro
  8. Incentives and Social Preferences in a Traditional Labor Contract: Evidence from Rice Plantng Field Experiments in the Philippines By Goto, Jun; Aida, Takeshi; Aoyagi, Keitaro; Sawada, Yasuyuki
  9. A Century of Human Capital and Hours By Diego Restuccia; Guillaume Vandenbroucke
  10. Do cooperative enterprises create social trust? By Fabio Sabatini; Francesca Modena; Ermanno Tortia
  11. Work Incentive Simplification Pilot (WISP): Recommendations of the Technical Advisory Panel Regarding the Evaluation Design. Washington, DC: Mathematica Policy Research By David Wittenburg; David R. Mann; David C. Stapleton
  12. Social Incentives Matter: Evidence from an Online Real Effort Experiment By Tonin, Mirco; Vlassopoulos, Michael
  13. Social insurance, work norms, and the allocation of talent By Corneo, Giacomo
  14. Better Workers Move to Better Firms: A Simple Test to Identify Sorting By Cristian Bartolucci; Francesco Devicienti
  15. Myopic Risk Taking in Tournaments By Eriksen, Kristoffer; Kvaløy, Ola
  16. Organizations, Autonomy and Leadership: the importance of the context By Jocelyne Robert
  17. The internal and external governance of cooperatives: the effective membership and consistency of value By Sacchetti, Silvia; Tortia, Ermanno

  1. By: Kvaløy, Ola (UiS Business School, University of Stavanger); Olsen, Trond E. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: When a worker is offered performance related pay, the incentive effect is not only determined by the shape of the incentive contract, but also by the probability of contract enforcement. We show that weaker enforcement may reduce the worker's effort, but lead to higher-powered incentive contracts. This creates a seemingly negative relationship between effort and performance pay.
    Keywords: Effort; performance pay; incentive contract
    JEL: J30
    Date: 2012–07–10
  2. By: Michael Kopel (University of Graz); Marco Marini (La Sapienza University)
    Abstract: The main aim of this paper is to derive properties of an optimal compensation scheme for consumer cooperatives (Coops) in situations of strategic interaction with profit- maximizing firms (PMFs). Our model provides a reason why Coops are less prone than PMFs to pay variable bonuses to their managers. We show that this occurs under price competition when in equilibrium the Coop prefers to pay a straight salary to its manager whereas the profit-maximizing rival adopts a variable, high-powered incentive scheme. The main rationale is that, due to consumers' preferences, a Coop is per se highly expansionary in term of output and, therefore, does not need to provide strong strategic incentives to their managers to expand output aggressively by undercutting its rival.
    Keywords: Consumer Cooperatives, Strategic Incentives, Price Competition, Oligopoly.
    JEL: C70 C71 D23 D43
    Date: 2012
  3. By: Román Andrés Zárate
    Abstract: Economic literature has identified positive effects of peer abilities on individual achievement. However, the intuitive arguments supporting this evidence are not clear. This article presents a specific mechanism: cooperation and competition among group members; more precisely, the presence of positive and negative externalities in human capital accumulation. First, I develop an economic model that incorporates both kinds of externalities and shows the existence of an optimal level of competition between group members that maximizes human capital accumulation. Then, using data from PISA (2000) and an empirical strategy that controls for potential endogeneity issues, I find empirical evidence supporting the main results of the theoretical model. Namely, I find robust evidence of a non-linear effect of competition on academic performance. These results are consistent with the proposed model and the presence of positive technological externalities in educational production functions.
    Date: 2012–06–11
  4. By: Michael Fritsch; Alina Rusakova
    Abstract: Drawing on representative household data from the German Socio-Economic Panel, we examine the role of an early precursor of entrepreneurial development – parental role models – for the individual decision to become self-employed in the post-unified Germany. The findings suggest that the socialist regime significantly damaged this mechanism of an intergenerational transmission of entrepreneurial attitudes among East Germans with a tertiary degree that have experienced a particularly strong ideological indoctrination. However, we find a significant and positive relationship between the presence of a parental role model and the decision to become self-employed for less-educated people. For West Germans the positive relationship holds irrespective of the level of education.
    Keywords: Entrepreneurship, parental role models, human capital
    JEL: L26 Z1 D03
    Date: 2012
  5. By: Kvaløy, Ola (UiS); Schöttner, Anja (University of Bonn)
    Abstract: We present a model in which a motivator can take costly actions - or what we call motivational effort - in order to reduce the effort costs of a worker, and analyze the optimal combination of motivational effort and monetary incentives. We distinguish two cases. First, the firm owner chooses the intensity of motivation and bears the motivational costs. Second, another agent of the firm chooses the motivational actions and incurs the associated costs. In the latter case, the firm must not only incentivize the worker to work hard, but also the motivator to motivate the worker. We characterize and discuss the conditions under which monetary incentives and motivational effort are substitutes or complements, and show that motivational effort may exceed the efficient level.
    Keywords: Incentives; Motivate
    JEL: A10
    Date: 2012–07–17
  6. By: Antonio Filippin (University of Milan and IZA); Marco Paccagnella (Bank of Italy)
    Abstract: In this paper we analyze the role played by self-confidence, modeled as beliefs about one’s ability, in shaping task choices. We propose a model in which fully rational agents exploit all the available information to update their beliefs using Bayes’ rule, eventually learning their true type. We show that when the learning process does not converge quickly to the true ability level, small differences in initial confidence can result in diverging patterns of human capital accumulation between otherwise identical individuals. If differences in self-confidence are correlated with socio-economic background (as a large body of empirical literature suggests), self-confidence can be a channel through which education and earning inequalities perpetuate across generations. Our theory suggests that cognitive tests should take place as early as possible, in order to avoid that systematic differences in self-confidence among equally talented people lead to the emergence of gaps in the accumulation of human capital.
    Keywords: human capital, self-confidence, socio-economic status
    JEL: I24 D83 J24 J62
    Date: 2012–07
  7. By: Jing Lan (National Graduate Institute for Policy Studies); Alistair Munro (National Graduate Institute for Policy Studies)
    Abstract: By using a unique cross-sectional dataset of Chinese industrial firms, this paper investigates the external and internal effects of human capital on firms’ environmental performance. The result shows that firms have better environmental compliance because they are ‘pushed’ into making compliance decision by internal driver of human capital and ‘pulled’ to be environmental friendly by external force of social human capital stock. This finding is robust when we take into account of possible endogeneity of human capital. In addition, evidence from this study suggests that the situation of weak implementation of environmental supervision and evasion of environmental monitoring could be reconciled by internal and external effects of human capital.
    Date: 2012–07
  8. By: Goto, Jun; Aida, Takeshi; Aoyagi, Keitaro; Sawada, Yasuyuki
    Keywords: Labor and Human Capital,
    Date: 2012
  9. By: Diego Restuccia; Guillaume Vandenbroucke
    Abstract: An average person born in the United States in the second half of the nineteenth century completed 7 years of schooling and spent 58 hours a week working in the market. By contrast, an average person born at the end of the twentieth century completed 14 years of schooling and spent 40 hours a week working. In the span of 100 years, completed years of schooling doubled and working hours decreased by 30 percent. What explains these trends? We consider a model of human capital and labor supply to quantitatively assess the contribution of exogenous variations in productivity (wage) and life expectancy in accounting for the secular trends in educational attainment and hours of work. We find that the observed increase in wages and life expectancy account for 80 percent of the increase in years of schooling and 88 percent of the reduction in hours of work. Rising wages alone account for 75 percent of the increase in schooling and almost all the decrease in hours in the model, whereas rising life expectancy alone accounts for 25 percent of the increase in schooling and almost none of the decrease in hours of work. In addition, we show that the mechanism emphasized in the model is consistent with other trends at a more disaggregate level such as the reduction in the racial gap in schooling and the decrease in the cross-sectional dispersion in hours.
    Keywords: Schooling, hours of work, productivity, life expectancy, trends, United States
    JEL: E1 I25 J11 O4
    Date: 2012–07–09
  10. By: Fabio Sabatini; Francesca Modena; Ermanno Tortia
    Abstract: This paper contributes to the literature by carrying out the first empirical investigation into the role of different types of enterprises in the creation of social trust. Drawing on a unique dataset collected through the administration of a questionnaire to a representative sample of the population of the Italian Province of Trento in March 2011, we find that cooperatives are the only type of enterprise where the work environment fosters the social trust of workers.
    Keywords: Cooperative enterprises, nonprofit organizations, trust, social capital, motivations, inclusive governance, work organization.
    JEL: L31 L33 P13 Z1 Z13
    Date: 2012–07–10
  11. By: David Wittenburg; David R. Mann; David C. Stapleton
    Abstract: Still in its early design stages, the Work Incentive Simplification Pilot is a Social Security Administration demonstration to test major simplifications to the Social Security Disability Insurance work incentives. This report presents recommendations from a technical advisory panel, convened by Mathematica and representing the academic, nonprofit, and governmental fields, to provide input on evaluation design options.
    Keywords: WISP, Work Incentive Simplification Pilot, Evaluation Design, Disabilty
    JEL: I J
    Date: 2012–04–25
  12. By: Tonin, Mirco (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Vlassopoulos, Michael (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Contributing to a social cause can be an important driver for workers in the public and non-profit sector as well as in firms that engage in Corporate Social Responsibility activities. This paper compares the effectiveness of social incentives to financial incentives using an online real effort experiment. We find that social incentives lead to a 20% rise in productivity, regardless of their form (lump sum or related to performance) or strength. When subjects can choose the mix of incentives half sacrifice some of their private compensation to increase social compensation, with women more likely than men. Furthermore, social incentives do not attract less productive subjects, nor subjects that respond more to exogenously imposed social incentives. Our calculations suggest that a dollar spent on social incentives is equivalent to increasing private compensation by at least half a dollar.
    Keywords: private incentives; social incentives; sorting; prosocial behavior; real effort experiment; corporate social responsibility; gender
    JEL: D64 J24 J32 L30 M14 M52
    Date: 2012–07–11
  13. By: Corneo, Giacomo
    Abstract: Across countries, generous social insurance comes along with weak work norms. This finding is often taken to mean that in the long run social insurance generates large output losses. But neither individual nor country data corroborates the view that weak work norms worsen economic performance. This paper offers a model of endogenous work norms that rationalizes that evidence. Weak work norms do not harm labor productivity because they are associated with an improved allocation of individual talents to occupations, while strong work norms arise as a defensive strategy of parents aiming at perpetueting their occupation along family lines. Evidence from microdata supports the view that (i) social insurance favors intergenerational occupational mobility and (ii) more mobile individuals endorse weaker work norms.
    Keywords: Social insurance; Work norms
    JEL: H2 O0
    Date: 2012–06
  14. By: Cristian Bartolucci; Francesco Devicienti
    Abstract: We propose a test that uses information on workers’ mobility, wages and firms’ profits to identify the sign and strength of assortative matching. The basic intuition underlying our empirical strategy is that, in the presence of positive (negative) assortative matching, good workers are more (less) likely to move to better firms than bad workers. Assuming that agents’ payoffs are increasing in their own types allows us to use within-firm variation on wages to rank workers by their types and firm profits to rank firms. We exploit a panel data set that combines Social Security earnings records for workers in the Veneto region of Italy with detailed balance-sheet information for employers. We find robust evidence that positive assortative matching is a pervasive phenomenon in the labor market. This result is in contrast with what we find from correlating the worker and firm fixed effects in standard Mincerian wage equations.
    Keywords: Assortative matching, workers’ mobility, matched employer-employee data.
    JEL: J6 J31 L2
    Date: 2012
  15. By: Eriksen, Kristoffer (UiS); Kvaløy, Ola (UiS)
    Abstract: There is a common notion that incentive schemes in the financial industry trigger myopia and risk-taking. In some sense this contrasts with the concept of myopic loss aversion (MLA), which implies that myopia mitigates risk-taking. A number of experimental studies support the MLA-hypothesis by showing that people take less risk the more frequently their investments are evaluated. In this paper we show experimentally that if subjects are exposed to tournament incentives, they take more risk the more frequently investments are evaluated.
    Keywords: tournaments
    JEL: A10
    Date: 2012–07–17
  16. By: Jocelyne Robert (management et leadership - Université de Liège)
    Abstract: We want to present the place of autonomy and freedom to take initiatives in the organisation. The response is one balance between control and autonomy. Corporate culture, leadership and corporate social responsibility play one essential role in contextual situations
    Keywords: Leadership; Organisations; Autonomy; Freedom
    Date: 2012–01
  17. By: Sacchetti, Silvia (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Tortia, Ermanno (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Cooperatives are characterised by mutual-benefit coordination mechanisms aimed at the fulfilment of members’ participation rights and welfare, consistently with the normative principles of democratic involvement, independence and care for the community. This ideal situation may find, in practice, obstacles within the internal characteristics of the cooperative as well as in the nature of relationship with other actors in the socio-economic environment. Building on evidence from the literature, the paper systematises and highlights some of the potential problems in the governance of cooperative firms concerning the accomplishment of cooperative mutualistic aims by way of means that do not hamper other stakeholders in the socio-economic environment. In exploring the internal conditions that may affect cooperative performance, we focus in particular on the role of rules and incentives towards such aims. In synergy, when analysing the external conditions that may affect cooperative performance, the paper addresses possible sources of external control, such as those related to the nature of the business relationships between the cooperative and its production network. In taking into account both internal and external conditions, we consider an extended notion of governance, whereby those who impact on strategic decision-making are not to be searched only within the internal governance bodies, typically the board of directors or managers, but also outside the cooperative, as in the extended network of production relationships in which the organisation is embedded.
    Keywords: cooperative firms; governance; incentives; motivations; production networks
    JEL: L21 L23 L26
    Date: 2012–07–03

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