nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒09‒22
fifteen papers chosen by
Tommaso Reggiani
University of Cologne

  1. Economic growth In the long run By Tamura, Robert; Dwyer, Gerald P.; Devereux, John; Baier, Scott
  2. The impact of TFP growth on the unemployment rate: does on-the-job training matter? By Moreno-Galbis, Eva
  3. The Business Cycle Human Capital Accumulation Nexus and its Effect on Labor Supply Volatility By Diana Alessandrini; Stephen Kosempel; Thanasis Stengos
  4. Revisiting the Complementarity between Education and Training: The Role of Personality, Working Tasks and Firm Effects By Katja Görlitz; Marcus Tamm
  5. Mediocrity and Induced Reciprocity By Natalia Montinari; Antonio Nicolò; Regine Oexl
  6. Delegation in Long-Term Relationships By Miriam Schütte; Philipp C. Wichardt
  7. The Aims of Lifelong Learning: Age-Related Effects of Training on Wages and Job Security By Julia Lang
  8. Higher and Higher? - Performance Pay and Wage Inequality in Germany By Katrin Sommerfeld
  9. Entrepreneurial employees: Are they different from independent entrepreneurs? By Nyström, Kristina
  10. Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges By Steven N. Kaplan
  11. Stricter employment protection and firms’ incentives to sponsor training: The case of French older workers By Messe, Pierre-Jean; Rouland, Bénédicte
  12. Wages, Employment, and Statistical Discrimination: Evidence from the Laboratory By David L. Dickinson; Ronald L. Oaxaca
  13. The Role of Job Satisfaction in Transitions into Self-Employment By Giuliano Guerra; Roberto Patuelli
  14. Essays on executive remuneration contracting: Managerial power, corporate payout, and gender discrimination. By Geiler, P.H.M.
  15. The Returns to Education for Opportunity Entrepreneurs, Necessity Entrepreneurs, and Paid Employees By Frank M. Fossen; Tobias J.M. Büttner

  1. By: Tamura, Robert; Dwyer, Gerald P.; Devereux, John; Baier, Scott
    Abstract: We present new data on real output per worker, schooling per worker, human capital per worker, real physical capital per worker for 168 countries. The output data represent all available data from Maddison. The physical capital data represent all available data from Mitchell. One major contribution is a new set of human capital per worker, the foundation of which comes mostly from Mitchell. We provide original estimates of schooling per worker & per young worker. With our preferred measure of human capital, between 66 percent to 90 percent of all the variation in long run growth can be explained by variation in the growth of inputs per worker, and only 10-34 percent from variation in TFP growth! Furthermore between 66 percent and 80 percent of the variation in log levels can be explained by variation in the log input levels and only 20 percent to 34 percent is explained by variation in log TFP levels!
    Keywords: economic growth; human capital; variance decomposition
    JEL: O11 O47 O15 J24
    Date: 2012–09–14
  2. By: Moreno-Galbis, Eva
    Abstract: This paper seeks to gain insights into the relationship between growth and unemployment in a setting with heterogeneous skills, human capital accumulation, on-the-job training and capital-skill complementarity. We use an endogenous job destruction framework in the style of Mortensen and Pissarides (1998) with directed search. We show that, when growth accelerates, a larger share of unskilled workers seeks training, increasing firms’ incentives to update job-specific technology (rather than destroying it). By magnifying the impact of growth on employment, the introduction of human capital issues allows the model to more closely match the estimated sensitivity of unemployment with respect to growth. When calibrated, the model manages to reproduce the aggregate capitalization effect estimated using OECD data. We find that growth reduces unemployment for individuals receiving training, while it increases the unemployment rate of unskilled workers without training (creative destruction effect).
    Keywords: growth; unemployment; training; capital-skill complementarity; human capital depreciation; capitalization; creative destruction effect
    JEL: J23 J24 O33
    Date: 2012–09
  3. By: Diana Alessandrini (Department of Economics and finance, University of Guelph, Canada); Stephen Kosempel (Department of Economics and finance, University of Guelph, Canada); Thanasis Stengos (Department of Economics and finance, University of Guelph, Canada)
    Abstract: This paper studies the cyclicality of human capital accumulation by using a lifecycle RBC model with two types of heterogeneity: age and productivity in learning. Results show that individuals invest more in human capital during economic downturns. In particular, schooling acts as a buffer sector and allows agents to compensate for the shock by accumulating more human capital. However, human capital accumulation is more countercyclical for young and low-productivity individuals because they face lower opportunity costs of education and a higher marginal product of human capital. These results are confirmed empirically using US data from the Current Population Survey.
    Keywords: human capital accumulation, business cycles, labor supply
    JEL: J24 E32 J22
    Date: 2012–08
  4. By: Katja Görlitz; Marcus Tamm
    Abstract: This paper addresses the question to which extent the complementarity between education and training can be attributed to differences in observable characteristics, i.e. to individual, job and firm specific characteristics. The novelty of this paper is to analyze previously unconsidered characteristics, in particular, personality traits and tasks performed at work which are taken into account in addition to the standard individual specific determinants. Results show that tasks performed at work are strong predictors of training participation while personality traits are not. Once working tasks and other job related characteristics are controlled for, the skill gap in training participation drops considerably for off-the-job training and vanishes for on-the-job training.
    Keywords: Training, personality traits, working tasks, Oaxaca decomposition
    JEL: I21 J24
    Date: 2012
  5. By: Natalia Montinari (Max Planck Institute of Economics, Jena, Germany); Antonio Nicolò (University of Padua, Italy); Regine Oexl (University of Innsbruck, Austria)
    Abstract: We report evidence from an experiment where a principal chooses an agent out of two to perform a task for a fixed compensation. The principal's payoff depends on the agent's ex-ante ability and on a non-contractible effort that the agent has to exert once employed. We find that a significant share of principals select the mediocre agent (i.e. the one with the lower ex-ante ability). When the principal is allowed to send a message, mediocre agents exert more effort than agents with the higher ability, and principals who chooses mediocre agents on average have a larger payoff than principals who select agents with higher ability. This difference in effort overcompensates the difference in ability. Mediocre agents reciprocate more than agents who have ex-ante higher ability when the principals are able to make them feeling indebted.
    Keywords: reciprocity, communication, incentives, mediocrity
    JEL: C9
    Date: 2012–09–12
  6. By: Miriam Schütte; Philipp C. Wichardt
    Abstract: This paper considers the e effcts of a two-period interaction on the decision of a principal to delegate authority to a potentially biased but better informed agent. Compared to the (repeated) one-period case, the agent's first period actions may also signal his type which in turn impacts wages in Period 2. As a result, biased agents have an incentive not to follow their own preferences in Period 1, thereby inducing the principal to delegate more often. Moreover, we find that, depending on the players' relative utilities and the wage schedule, long term relationships will increase aggregate welfare. Finally, to empirically support our findings, we analyse data from the German Socio-Economic Panel (SOEP) which show that temporary workers indeed experience less autonomy in their decisions.
    Keywords: delegation, signalling, reputation
    JEL: C72 C73 D82 D86 L22 M54
    Date: 2012
  7. By: Julia Lang
    Abstract: This study analyses the effects of training participation on wages and perceived job security for employees of different ages. Based on data from the German Socio-Economic Panel, results indicate that only younger workers benefit from training by an increase in wages, whereas older employees’ worries about losing their job are reduced. This observation can also be explained by the fact that goals of training courses are related to the age of participants. Moreover, I differentiate between workers who permanently and only occasionally participate in training. The results indicate that there seem to be decreasing marginal returns to training with respect to job security.
    Keywords: Training, Wages, Job security
    JEL: J24 J28 J31 M53
    Date: 2012
  8. By: Katrin Sommerfeld
    Abstract: Performance pay is of growing importance to the wage structure as it applies to a rising share of employees. At the same time wage dispersion is growing continuously. This leads to the question of how the growing use of performance pay schemes is related to the increase in wage inequality? German SOEP data for the years 1984 to 2009 confirm the large increase in the application of performance pay schemes. This in turn led to an upward shift of the wage distribution by about one log point. However, it did not contribute to the growth in wage inequality. Even though wage inequality grew within the group of employees who receive performance pay, it grew even more so within the group who do not receive it. Still, the wage difference between both wage schemes remained flat over the distribution. The empirical analysis employs sequential decompositions in a quantile regression framework.
    Keywords: Performance pay, wage structure, quantile regression, sequential decomposition
    JEL: J31 J33 C21
    Date: 2012
  9. By: Nyström, Kristina (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper uses individual-level data from the Swedish 2011 Global Entrepreneurship Monitor (GEM) to investigate differences with respect to individual characteristics associated with independent entrepreneurs (nascent entrepreneurship and new business ownership) and entrepreneurial employees. Are there any differences with respect to gender, age, income and education associated with these different forms of entrepreneurship? Furthermore, it can be argued that an entrepreneurial employee differs with respect to attitudes and perceptions about entrepreneurship. Do attitudes and perceptions about entrepreneurship, for example, perceiving entrepreneurship as good career choice, or the fear of failure differ between entrepreneurial employees and independent entrepreneurs? Our empirical findings shows what differs between entrepreneurial employees and independent entrepreneurs are their perceptions about opportunities and capabilities. Moreover, the probability of becoming an entrepreneurial employee increases with the level of education.
    Keywords: Entrepreneurial employees; Global Entrepreneurship monitor; Sweden
    JEL: D20 J24 L26
    Date: 2012–09–11
  10. By: Steven N. Kaplan
    Abstract: In this paper, I consider the evidence for three common perceptions of U.S. CEO pay and corporate governance: (1) CEOs are overpaid and their pay keeps increasing; (2) CEOs are not paid for performance; and (3) boards do not penalize CEOs for poor performance. While average CEO pay increased substantially through the 1990s, it has declined since then. CEO pay levels relative to other highly paid groups today are comparable to their average levels in the early 1990s. In fact, the relative pay of large company CEOs is similar to its average level since the 1930s. The ratio of large company CEO pay to firm market value also has remained roughly constant since 1960. This suggests that similar forces, likely technology and scale, have played a meaningful role in driving CEO pay and the pay of others with top incomes. With regard to performance, CEOs are paid for performance and penalized for poor performance. Finally, boards do monitor CEOs. The rate of CEO turnover has increased in the 2000s compared to the 1980s and 1990s, and is significantly tied to poor stock performance. While corporate governance failures and pay outliers as well as the very high average pay levels relative to the typical household undoubtedly have contributed to the common perceptions, a meaningful part of CEO pay appears to be market determined and boards do appear to monitor their CEOs. Consistent with that, top executive pay policies at over 98% of S&P 500 and Russell 3000 companies received majority shareholder support in the Dodd-Frank mandated Say-On-Pay votes in 2011.
    JEL: G30 G32 J33 L2
    Date: 2012–09
  11. By: Messe, Pierre-Jean; Rouland, Bénédicte
    Abstract: From French data, this paper uses a difference-in-differences approach combined with propensity score matching to identify the effect of an exogenous change in employment protection among older workers on firm’s incentives to sponsor training. Laying off workers aged 50 and above, French firms have to pay a tax to the unemployment insurance system, known as the Delalande tax. In 1999, the measure was subjected to a reform that increased due taxes but that did not concern equally all firms. We find that this exogenous shock to employment protection for older workers substantially rises firms’ incentives to train the 45-49 age group of workers. This result confirms predictions of the simple labor market model we develop in a first stage.
    Keywords: older workers; employment protection; firms’ training incentives
    JEL: J14 J24 J26
    Date: 2012–09
  12. By: David L. Dickinson; Ronald L. Oaxaca
    Abstract: When membership in a particular group conveys valuable information about an individual’s skills, productivity, or other human capital characteristics, a non-prejudiced agent may still find it rational to statistically discriminate. We frame statistical discrimination in a labor market setting for a series of laboratory experiments. A main objective of our experiments is to examine how varying productivity risk along several dimensions impacts outcomes across worker groups. Our design expands upon existing research by generating laboratory data both on wage contracts and unemployment rates of directly competing worker groups. We find some evidence for statistical wage discrimination against workers with identical expected productivity but higher productivity variance. However, those same subjects are less likely to be unemployed, suggesting that our employers view hiring choice and wage contracts as substitutable. These laboratory results have interesting implications for labor markets where employers select from workers belonging to distinct statistical groups, and suggest that statistical discrimination based on wages alone may overestimate the true effect of such discrimination. Key Words:
    Date: 2012
  13. By: Giuliano Guerra (Ufficio per lo sviluppo economico, Repubblica e Cantone Ticino, Switzerland); Roberto Patuelli (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis (RCEA), Italy)
    Abstract: As observed in many advanced economies experiencing an increase of self-employment rates since the late 1970s, a flourishing small- and medium-size enterprise sector is traditionally associated with positive economic development and growth. In the regional context, areas benefiting from an established entrepreneurial culture are in general more successful and innovative, as well as better equipped to sustain structural changes and to lessen unemployment. It is therefore important to investigate the reasons why individuals choose self-employment, and why they do it despite lower protection, higher risks, and possibly more effort than what is required in a comparable wage employment position. Existing research identifies better prospects of entrepreneurial earnings as compared to wages as a major stimulus towards self-employment. However, besides pecuniary motivations, other factors may be considered when it comes to the occupational choice. These include displacement, uncertainty, (the threat of) unemployment, and (dis)-satisfaction. Building on a job quits model, we propose a representation of transition behaviour from wage to self-employment which includes subjective evaluations of pecuniary and nonpecuniary satisfaction on the previous job. Individual microdata are drawn from the Swiss Household Panel (SHP), and cover the time period 1999–2008. Additionally, we focus on the dynamics of job satisfaction in order to highlight the role played by shocks in subjective evaluations, and introduce their interaction with levels to control for threshold effects.
    Keywords: self-employment, job satisfaction, job transition, Switzerland
    JEL: C25 J62 M13
    Date: 2012–09
  14. By: Geiler, P.H.M. (Tilburg University)
    Abstract: Chapter 4 examines the existence of the gender pay gap among top managers in the UK. The study suggests the existence of substantial differences in both the level and mix of executive remuneration between male and female executives, but fails to establish a gender pay gap at the CEO level. The fourth chapter also shows that the pay-for-performance sensitivity of female CEOs is higher than that of male CEOs.
    Date: 2012
  15. By: Frank M. Fossen; Tobias J.M. Büttner
    Abstract: We assess the relevance of formal education for the productivity of the self-employed and distinguish between opportunity entrepreneurs, who voluntarily pursue a business opportunity, and necessity entrepreneurs, who lack alternative employment options. We expect differences in the returns to education between these groups because of different levels of control. We use the German Socio-economic Panel and account for the endogeneity of education and non-random selection. The results indicate that the returns to a year of education for opportunity entrepreneurs are 3.5 percentage points higher than the paid employees’ rate of 8.1%, but 6.5 percentage points lower for necessity entrepreneurs.
    Keywords: returns to education, opportunity, necessity, entrepreneurship
    JEL: J23 J24 J31 I20 L26
    Date: 2012

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