nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒10‒20
seven papers chosen by
Tommaso Reggiani
University of Cologne

  1. Carrots that Look Like Sticks: Toward an Understanding of Multitasking Incentive Schemes By Omar Al-Ubaydli; Steffen Andersen; Uri Gneezy; John A. List
  2. Linking HR and Line Agents’ Implementation of High- Performance Work Systems to Intentions to Leave and Job Performance: A Social Exchange Perspective By N. SOENS; D. BUYENS; M. S. TAYLOR
  3. Joint-Liability vs. Individual Incentives in the Classroom. Lessons from a Field Experiment with Undergraduate Students By Alejandro Cid; José María Cabrera
  4. Incentive Effects of Funding Contracts: An Experiment By Irenaeus Wolff; J. Philipp Reiss
  5. Value Oriented Organizations with Value Neutral Hierarchies By Echeverría, Manuel
  6. Motivational cherry picking By Regner, Tobias; Riener, Gerhard
  7. The Evolution of Education: A Macroeconomic Analysis By Diego Restuccia; Guillaume Vandenbroucke

  1. By: Omar Al-Ubaydli; Steffen Andersen; Uri Gneezy; John A. List
    Abstract: Constructing compensation schemes for effort in multi-dimensional tasks is complex, particularly when some dimensions are not easily observable. When incentive schemes contractually reward workers for easily observed measures, such as quantity produced, the standard model predicts that unrewarded dimensions, such as quality, will be neglected. Yet, there remains mixed empirical evidence in favor of this standard principal-agent model prediction. This paper reconciles the literature by using both theory and empirical evidence. The theory outlines conditions under which principals can use a piece rate scheme to induce higher quantity and quality levels than analogous fixed wage schemes. Making use of a series of complementary laboratory and field experiments we show that this effect occurs because the agent is uncertain about the principal’s monitoring ability and the principal’s choice of a piece rate signals to the agent that she is efficient at monitoring.
    JEL: C93 D01
    Date: 2012–10
    Abstract: Unlike common assessments of the overall presence of high-performance work systems (HPWS), this study focuses on actual implementation of HPWS by two specific agents, i.e., the HR department and line management. We investigate how HPWS implementation by HR and line agents – as perceived by employees – relates to intentions to leave and job performance and we propose perceived organizational support (POS) and leader-member exchange (LMX) as potential mediating mechanisms. Respondents (N=266) were nonmanagerial employees from a research organization in Belgium. Results revealed that HPWS implementation by the HR department was indirectly related to intentions to leave through POS. Furthermore, we found that HPWS implementation by line management related to intentions to leave through the mediation of POS and LMX and it related to job performance through the mediation of LMX. These findings contribute to the literature by providing a more refined picture of the social exchange mechanisms that mediate between HPWS and important employee outcomes and inform HR and line practitioners of the employee outcomes associated with their HRM actions.
    Keywords: High-performance work systems, implementation, line management, employee outcomes, social exchange
    Date: 2012–05
  3. By: Alejandro Cid; José María Cabrera
    Abstract: We evaluate the impact of joint-liability incentives in the classroom using a randomized field experiment. The instructor designs groups of three students in the classroom and provides a premium to their homework's grade only if all three members of the group meet some requirements. To isolate the joint-liability effect from selfish motivations, we also design an individual incentives treatment. We find that joint-liability incentives impact positively on the grades attained in homework and midterm exams both in experimental courses and in other courses taken by the students in the semester. Though the average positive effect seems to disappear in final exams, the overall impact of joint-liability incentives on the academic achievements in the semester is still positive. A drawback of this program is a decrease in classmate satisfaction. The significant effectiveness of the peer monitoring developed by joint-liability incentives in a group provides novel implications for the design of grading policies in the classroom and for other social settings where incentives may be based in peer monitoring or joint liability.
    Keywords: field experiment; randomization; education; joint liability; student incentives
    JEL: I20 I23
    Date: 2012
  4. By: Irenaeus Wolff; J. Philipp Reiss
    Abstract: We examine the incentive effects of funding contracts on entrepreneurial effort decisions and allocative efficiency. We experiment with funding contracts that differ in the structure of investor repayment and, therefore, in the incentives for entrepreneurial effort provision. Theoretically the replacement of a standard debt contract by a repayment-equivalent non-monotonic contract reduces effort distortions and increases efficiency. Likewise the replacement of outside equity by a repayment-equivalent standard-debt contract mitigates distortions. We test both hypotheses in the laboratory. Our results reveal that the incentive effects of funding contracts need to be experienced before they reflect in observed behavior. With sufficient experience observed behavior is consistent with the theoretical predictions and supports both hypotheses. If we allow for entrepreneur-sided manipulations of the project outcome we find that non-monotonic contracts lose its appeal.
    Keywords: hidden information, funding contracts, incentives, experiment, standard debt contract, non-monotonic contract, state manipulation
    Date: 2012
  5. By: Echeverría, Manuel (Department of Economics, Lund University)
    Abstract: This paper gives a game-theoretical treatment of the institutional homogenization of value-oriented firms. It explains why intrinsically motivated, value-oriented firms like non-profits may become similar to for-profit firms in terms of organization and norms. It highlights and explains the pairs: value-oriented and flat organizations in contrast to value-neutral managers and hierarchical organizations. We consider a major donor like the government who delegates a project to an organization without endowments under asymmetric information. The non-profit is able to adapt its organization by establishing a hierarchy with an intrinsically motivated manager. The donor can in turn react by employing institutions in order to cope with information asymmetries regarding the mission of the organization and the unverifiable values of the manager. Two main cases are examined, one without competition and a competitive case. The equilibrium in the first case is a flat organization or alternatively highly altruistic hierarchy. The second competitive case is characterized by a value neutral hierarchy.
    Keywords: Institutional change; Governance; Nonprofit; Hierarchy; Culture
    JEL: L30 L31 L33 M12 M14
    Date: 2012–09–27
  6. By: Regner, Tobias; Riener, Gerhard
    Abstract: We construct a simple three person trust game with one trustor and two trustees. The trustor has the possibility to either trust both trustees or none, while the trustees make their decisions either sequentially or simultaneously, depending on the treatment. When trustees play sequentially, follower trustees who are informed about the leader's choice are significantly more selfish than in the simultaneous move treatment, independent of the leader's choice. Leaders do not behave significantly different than in the baseline treatment. Follower trustees cherry pick the motivation that materially serves them best. When the leader trustee plays selfish, they tend to conform. When the leader makes a pro-social choice, followers seem to perceive the duty as already fulfilled by the leader. While guilt works well as a motivational force in a dyadic situation, it gets alleviated easily when the situation allows a shifting of responsibility. --
    Keywords: Team production,Trust,Choice architecture,Guilt aversion,Conformity,False consensus effect,Lab experiment,Cherry picking
    JEL: D03 D71 C79 C92
    Date: 2012
  7. By: Diego Restuccia; Guillaume Vandenbroucke
    Abstract: Between 1940 and 2000 there has been a substantial increase of educational attainment in the United States. What caused this trend? We develop a model of human capital accumulation that features a non-degenerate distribution of educational attainment in the population. We use this framework to assess the quantitative contribution of technological progress and changes in life expectancy in explaining the evolution of educational attainment. The model implies an increase in average years of schooling of 24 percent which is the increase observed in the data. We find that technological variables and in particular skill-biased technical change represent the most important factors in accounting for the increase in educational attainment. The strong response of schooling to changes in income is informative about the potential role of educational policy and the impact of other trends affecting lifetime income.
    Keywords: educational attainment, schooling, skill-biased technical progress, human capital.
    JEL: E1 O3 O4
    Date: 2012–10–06

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