nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒11‒03
twelve papers chosen by
Tommaso Reggiani
University of Cologne

  1. The structure of CEO pay: pay-for-luck and stock-options By Chaigneau, Pierre; Sahuguet, Nicolas
  2. A “Human Growth” Perspective on Organizational Resources and Firm Performance By Silvia Sacchetti; Ermanno C. Tortia
  3. Human Capital, Culture and the Onset of the Demographic Transition By David Cuberes; Alberto Basso
  4. Worker Cooperatives and Democratic Governance By John Pencavel
  5. School quality, labor markets and human capital investments : long-term impacts of an early stage education intervention in the Philippines By Yamauchi, Futoshi; Liu, Yanyan
  6. Birthplace Diversity of the Workforce and Productivity Spill-overs in Firms By René Böheim; Thomas Horvath; Karin Mayr
  7. Teacher Quality Policy When Supply Matters By Rothstein, Jesse
  8. Catch me if you learn: development-specific education and economic growth By Fabio Cerina; F. Manca
  9. Informal incentive labour contracts and product market competition By Nicola Meccheri; Luciano Fanti
  10. The Influence of Superstars on Organizational Identification of External Stakeholders: Empirical Findings from Professional Soccer By Daniel Hogele; Sascha L. Schmidt; Benno Torgler
  11. The Brain Gain of Corporate Boards: A Natural Experiment from China By Giannetti, Mariassunta; Liao, Guanmin; Yu, Xiaoyun
  12. Organization Commitment of Public Primary School Senior Head Teachers By Ahmad, AR; Yunus, NKY; Norwani, NM; Musa, K

  1. By: Chaigneau, Pierre; Sahuguet, Nicolas
    Abstract: We develop a stylized model of efficient contracting in which firms compete for CEOs. The optimal contracts are designed to retain and insure CEOs. The retention motive explains pay-for-luck in executive compensation, while the insurance feature explains asymmetric pay-for-luck. We show that the optimal contract can be implemented with stock-options based on a single performance measure which does not filter out luck. When the capacity to dismiss underperforming CEOs differs across firms, and the ability of different CEOs is more or less precisely estimated ex-ante, endogenous matching between CEOs and firms can explain the observed association between pay-for-luck and bad corporate governance. The model also predicts that an improvement in the governance of badly governed firms has spillover effects that increase CEO pay in all firms.
    Keywords: CEO pay; corporate governance; pay-for-luck; stock-options
    JEL: G34 M12
    Date: 2012–10
  2. By: Silvia Sacchetti; Ermanno C. Tortia
    Abstract: We define immaterial satisfaction as the degree of wellbeing that workers derive from creativity, autonomy, and personal growth, overall self-fulfillment. These are dimensions of satisfaction that we relate, from American pragmatism, to the use of creative intelligence. The paper deals with the mediating role of immaterial satisfaction between organizational processes (defined by teamwork, on-the-job autonomy and involvement) and organizational performance (defined in terms of improvements in product quality and innovation). We address this relationship in the Italian social service sector. To this end, we implement a structural equation model including both observed and latent variables using a survey dataset that concerns 4134 workers and 320 not-for-profit social cooperatives. The analysis of direct, indirect and total effects in the structural model shows that autonomous innovation positively influences performance. It also shows that impact immaterial satisfaction adds to the impact of worker involvement in making involvement bear positively on performance, while it also reduces the negative impact of task-autonomy. Common method bias is controlled for by resorting to post-hoc testing and by introducing three distal sources of subjective data from directors, managers and paid workers
    Keywords: Dewey, satisfaction, creativity, autonomy, involvement, firm performance
    JEL: J28 J81 L15 L25 L84 M54
    Date: 2012
  3. By: David Cuberes (Department of Economics, The University of Sheffield); Alberto Basso (University of Alicante, Spain)
    Abstract: This paper uses estimates of the dates at which different countries have experienced their demographic transitions to examine the main historical determinants of these transitions. We first show that genetic distance to the United Kingdom, a measure of cultural relatedness used in Spolaore and Wacziarg (2009), is positively associated with the onset of the demographic transition, implying that countries that have a larger genetic distance from the UK tend to experience later transitions. We then unveil a plausible mechanism that can rationalize this result. We show that genetic distance to the UK is negatively related to a country's initial human capital, measured as its schooling level in 1870. One interpretation of this finding is that a larger genetic distance is associated with higher barriers to technological diffusion and hence a lower demand for human capital. This low demand for human capital then delays the demographic transition by providing less incentives for households to switch from quantity to quality of children. Instrumenting initial human capital using genetic distance to the UK and alternative measures of adherence to Protestantism, we confirm the causal link between human capital and the onset of the demographic transition. Further, we show that the impact of cultural relatedness to the UK can be mainly attributed to its effect on educational levels.
    Keywords: education, culture, fertility transition, unified growth theory
    JEL: J10 N10 O18 I20
    Date: 2012
  4. By: John Pencavel (Stanford University)
    Abstract: A worker co-operative is a firm that is owned and managed by those who work in it. This paper provides a selective review of research in economics on worker cooperatives. It concentrates on the volatility of earnings and employment in the co-ops compared with conventional capitalist firms; on the long-term viability of co-ops; on the relative productive efficiency of co-ops; and on problems of democratic governance within co-ops. Using modern empirical methods applied to large numbers of observations, recent research has substantially enhanced our understanding of worker co-ops.
    Keywords: worker cooperatives, productivity, viability, governance
    JEL: J54
    Date: 2012–10
  5. By: Yamauchi, Futoshi; Liu, Yanyan
    Abstract: This paper examines the long-term impacts of improved school quality at the elementary school stage on subsequent schooling investments and labor market outcomes using unique data from a recent survey that tracked students in the Philippines. The empirical results, which are based on a comparison of students who graduated from schools located in adjacent treatment and control areas before and after a school intervention, show significant differences in subsequent schooling investments, migration, and labor market earnings between females and males. That is, females study more (relative to males) and tend to migrate and earn more if they receive high-quality educational investments at an early stage. The above results are consistent with females'greater incentives to study, driven by their higher returns to schooling, especially after high school completion, observed in the labor market.
    Keywords: Tertiary Education,Education For All,Secondary Education,Primary Education,Access to Finance
    Date: 2012–10–01
  6. By: René Böheim (WIFO); Thomas Horvath (WIFO); Karin Mayr
    Abstract: We analyse the effect of workforce composition by birthplace in Austrian firms on workers' wages. In our model, each worker's productivity may depend on whether the co-workers are of the same or of a different birthplace and wages depend therefore both on the relative size of workers' groups as well as on the production structure of firms. We derive empirically testable hypotheses about the effect of co-worker birthplace on wages using a stylised model of intra-firm spill-overs across worker groups. We find evidence for complementarities between workers of different birthplace in line with our model that persist (but become smaller in size) after we control for observable productivity characteristics such as occupation and work experience.
    Keywords: Immigration, Labour force composition, Labour productivity
    Date: 2012–10–22
  7. By: Rothstein, Jesse
    Abstract: Recent proposals would strengthen the dependence of teacher pay and retention on performance, in order to attract those who will be effective teachers and repel those who will not. I model the teacher labor market, incorporating dynamic self-selection, noisy performance measurement, and Bayesian learning. Simulations indicate that labor market interactions are important to the evaluation of alternative teacher contracts. Typical bonus policies have very small effects on selection. Firing policies can have larger effects, if accompanied by substantial salary increases. However, misalignment between productivity and measured performance nearly eliminates the benefits while preserving most of the costs.  
    Keywords: Teacher Education and Professional Development, Specific Levels and Methods, Economics, General, Teachers, Education, Teacher quality, Evaluation
    Date: 2012–09–01
  8. By: Fabio Cerina; F. Manca
    Abstract: This paper presents a theoretical and empirical investigation of the relationship between human capital composition and economic growth. From the theoretical point of view, we generalize Vandenbussche et al. (2006) by allowing for non-constant returns to scale in imitation and innovation activities and we find that - unlike the previous work and for a wide range of parameters’ values - the impact of skilled workers on growth increases at lower stages of development. As for empirical evidence, we estimate Vandenbussche et al. (2006) the size using a 85 countries 1960-2000 panel with developed and developing countries using System GMM technique to address the problem of endogeneity. The analysis supports the model predictions in providing robust evidence of an increasing impact of tertiary education as the economy moves farther away from the frontier. Results are robust to different proxies of human capital and different specifications.
    Keywords: Technological frontier; innovation; imitation; human capital; skilled; unskilled; growth
    JEL: O33 O47 O11
    Date: 2012
  9. By: Nicola Meccheri; Luciano Fanti
    Abstract: This paper studies the dynamic interaction between product market competition and incentives against shirking. It is shown that efficiency wages can both increase and decrease when competition becomes fiercer. Instead, discretionary bonuses do not vary with competition but there exists an upper threshold for the number of competing firms, over which such schemes are no longer sustainable as equilibrium. Finally, industry profits under bonuses are generally higher than under eciency wages, but the reverse actually applies when information about firms’ misbehaviour flows at a low rate and the number of firms exceeds the critical threshold.
    Keywords: eciency wages, discretionary bonuses, competition, industry profits
    JEL: J33 J41 L13
    Date: 2012–06–01
  10. By: Daniel Hogele (EBS Business School); Sascha L. Schmidt (EBS Business School); Benno Torgler (QUT)
    Abstract: This paper examines the effect of superstars on external stakeholders' organizational identification through the lens of sport. Drawing on social identity theory and the concept of organizational identification, as well as on role model theories and superstar economics, we develop several hypotheses regarding the influence of soccer stars on their fans' degree of team identification. Using a proprietary dataset including archival data on professional German soccer players and clubs as well as survey data of more than 1,400 soccer fans, we find evidence for a positive effect of superstar characteristics and role model perception. We further find that players who measure up to the definition of a superstar are more important to fans of established teams than to fans of unsuccessful teams. The player's club tenure, however, seems to have no influence on fans' team identification. We argue that the effect of soccer stars on their fans is comparable to that of CEOs on their organizations' external stakeholders and consequently apply our results to the business domain. Our results contribute to organizational identification research by extending the list of determinants related to individual persons.
    Keywords: Organizational identification; superstars; role model; fans; soccer
    JEL: L83 J0 M0 Z13
    Date: 2012–10–25
  11. By: Giannetti, Mariassunta; Liao, Guanmin; Yu, Xiaoyun
    Abstract: We study the impact of directors with foreign experience on firms in emerging markets. To establish causality, we use a unique dataset from China and exploit that at different times, Chinese provinces introduced policies to attract highly talented emigrants. These policies led to an exogenous increase in the supply of Chinese individuals with foreign experience in the local labor market and ultimately increased the likelihood that firms in these provinces had directors with foreign experience in comparison to firms with a similarly high demand for these skills elsewhere. We document that hiring directors with foreign experience results in higher firm valuation, productivity, and profitability. Furthermore, corporate governance improves and firms are more likely to make international acquisitions, to export, and to raise funds internationally. These results indicate that the transfer of knowledge to emerging markets occurs not only through foreign investment, but also through labor flows and, in particular, return migration.
    Keywords: corporate boards; corporate governance; firm performance; firm productivity; human capital
    JEL: D22 D80 F21 F22 G30 J24
    Date: 2012–10
  12. By: Ahmad, AR; Yunus, NKY; Norwani, NM; Musa, K
    Abstract: Commitment to organization is important and plays key role in the formation of an integrated human effort in an organization. The importance of organizational commitment has attracted consideration over recent years and has been reflected in many management studies. Specifically, the objective of this study was to identify the significant difference between the selected demographic variables and organizational commitment. A quantitative cross sectional research design with purposive sampling was employed in collecting data. The cross sectional survey design was used to determine the demographic variables of gender and ethnicity. The questionnaires for Organizational Commitment was originated by Mowday et al., (2003). The respondents for this study were senior public primary school head teachers who attended the three years intensive program of Bachelor Degree in Education Management. Two cohorts comprised of 107 students were chosen from 600 students who enrolled for the Head Teacher Degree Program. They were purposively selected because they represented almost equal numbers of respondents based on gender and ethnicity of the ratio of people in Malaysia. The results of the analysis revealed that organizational commitment showed no significant different between male and female. There was significant difference for organizational commitment related to ethnic of Malay, Chinese and Indian. In conclusion, the degree of commitment of the organization among senior teacher has shown the differences between the ethnics but no different between the gender. Therefore, organization need to build up the necessary efforts to encourage and enable the different ethnics to strive their strong commitment to the organization. This will enable the organization to meet future challenges and at the same time maintain employee’s attachment to the organization.
    Keywords: Public school; commitment; organizational commitment; ethnicity
    JEL: I21
    Date: 2012

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