nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒12‒06
eleven papers chosen by
Tommaso Reggiani
University of Cologne

  1. Peer Pressure in Multi-Dimensional Work Tasks By Felix Ebeling; Gerlinde Fellner; Johannes Wahlig
  2. Agency Problem II and Convergence in CEO Pay By Janto Haman; Hristos Doucouliagos; Michael Graham
  3. Empirical analysis of regional economic performance in Russia: Human capital perspective By Kufenko, Vadim
  4. Job Search, Human Capital and Wage Inequality By Carrillo-Tudela, Carlos
  5. Incentive Effects of Funding Contracts: An Experiment By J. Philipp Reiß; Irenaeus Wolff
  6. Does workplace social capital moderate the associations between job stressors and psychological distress? A cross-sectional analysis among Japanese workers By Oshio, Takashi; Inoue, Akiomi; Tsutsumi, Akizumi
  7. Performance measurement in an input-output framework. By Raa, T. ten
  8. Works councils: An agency perspective By Juan M. Gallego
  9. Dynamic Contracts Under Loss Aversion By Andrea Repetto
  10. Use and Abuse of Authority By Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
  11. Reconciling economics and psychology on intrinsic motivation By Bruno, Bruna

  1. By: Felix Ebeling; Gerlinde Fellner; Johannes Wahlig
    Abstract: We study the influence of peer pressure in multi-dimensional work tasks theoretically and in a controlled laboratory experiment. Thereby, workers face peer pressure in only one work dimension. We find that effort provision increases in the dimension where peer pressure is introduced. However, not all of this increase translates into a productivity gain, since the effect is partly offset by a decrease of effort in the work dimension without peer pressure. Furthermore, this tradeoff is stronger for workers who run behind in the dimension of peer pressure. Finally, we analyze the optimal group composition to harness peer pressure. Effort in the dimension of peer pressure and overall productivity seem to be unaffected by group composition, but the effort reduction in the dimension that is not subject to peer pressure is stronger when workers’ skills are highly diverse. Hence, it seems like optimal group composition depends on work environment. While existing literature recommends maximizing worker-groups’ skill diversity in one-dimensional work tasks, our results suggest to mix similar workers in multi-dimensional tasks.
    Keywords: Peer Effects, Multi Tasking, Incentives, Laboratory Experiment
    JEL: D03 D2 J21
    Date: 2012–11–15
  2. By: Janto Haman; Hristos Doucouliagos; Michael Graham
    Abstract: Convergence in CEO pay occurs when pay differentials narrow over time. We analyze and compare differences in the rate of convergence in CEO pay of Australian listed firms with high shareholding concentration (HSC) and without, for the period 1992 to 2009. We find zero and negative pay-for-performance and pay-for-firm size associations in HSC firms, indicating entrenchment and suboptimal CEO contract design. In contrast, positive pay-for-performance effects exist in non-HSC firms. The rate of convergence in CEO pay is higher in HSC firms. While there is relatively strong investor protection, our findings indicate that Australian HSC firms face high private benefits of control and one avenue for extracting these benefits is through a higher rate of convergence in CEO pay.
    Keywords: Agency Problem II; CEO Pay; Convergence; Shareholding Concentration
    JEL: G30 J33 M52
    Date: 2012–11–16
  3. By: Kufenko, Vadim
    Abstract: Having shown the important role of the Russian economy in the ex-USSR region by causality tests, we proceed to empirical analysis of growth and performance of the Russian regions. A dynamic panel data approach enabled us to obtain elasticity coefficients on proxies for convergence, physical capital, labour and innovation. After including human capital in the reformulated model we resolve endogeneity and reverse causality by introducing two instrumental variable approaches. Taking advantage of the Unified State Exam data we managed to successfully endogenize human capital by number (and share) of outperforming students and by the education index. The second approach helped to improve causality between instruments and human capital: the dates of first university foundation and distance to Moscow successfully explains human capital variations due to historical and spatial characteristics of a given region. --
    Keywords: growth regressions,regional analysis,human capital,system GMM,instrumental variables
    JEL: C01 E24 O40 O47
    Date: 2012
  4. By: Carrillo-Tudela, Carlos
    Abstract: This paper constructs and quantitatively assesses an equilibrium search model with on-the- job search and general human capital accumulation. In the model workers differ in their innate abilities and firms in their productivities. Wages are dispersed because of search frictions and workers productivity differentials. Using the (log) wage variance decomposition implied by the model I show that wage inequality among low skilled workers is mostly driven by differ- ences in their productivities. Among medium skilled workers, productivity differentials and search frictions are equally important. The model reproduces the observed cross-sectional wage distribution, the average wage-experience profile and the observed Mean-min ratio.
    Date: 2012–10–22
  5. By: J. Philipp Reiß (Department of Economics, University of Maastricht, The Netherlands); Irenaeus Wolff (Thurgau Institute of Economics at the University of Konstanz, Department of Economics, Germany)
    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
    JEL: C91 D82 G21
    Date: 2012–09–30
  6. By: Oshio, Takashi; Inoue, Akiomi; Tsutsumi, Akizumi
    Abstract: Previous studies have shown that workplace social capital (WSC) affects workers' health, but its role as a moderator of the associations between job stressors and health outcomes has been largely understudied. The current study investigated whether and to what extent WSC moderates the associations between job stressors and psychological distress among Japanese workers. We used cross-sectional data (N = 9,350) collected from a baseline survey of an occupational cohort study (Japanese Study of Health, Occupation, and Psychosocial Factors Related Equity; J-HOPE) conducted among the employees of 12 companies/organizations in Japan. We focused on the bonding and horizontal aspects of WSC at the individual level, considering job demands/control, effort/reward, and two types of organizational justice (procedural and interactional justice) as job stressors. We defined psychological distress as scoring ≥5 on the K6 scale. Our multilevel, multivariate logit models showed that individual-level WSC moderated the associations of psychological distress with high job demands, high effort, and low interactional justice, but not those with low job control, reward, or procedural justice. We also observed a moderation effect of dichotomized WSC only with a higher cutoff point for high WSC. These results suggest that WSC selectively moderates the associations between job stressors and mental health and that it works as a moderator only at sufficiently high levels.
    Keywords: Workplace social capital, Psychological distress, Job strain, Effort-reward imbalance, Procedural justice, Interactional justice
    Date: 2012–11
  7. By: Raa, T. ten (Tilburg University)
    Date: 2012
  8. By: Juan M. Gallego
    Abstract: This paper investigates the role of works councils in a simple agency framework in which works councils are supposed to monitor manager’s information on behalf of the workforce, but they are independent agents who might pursue their private interest. First, we consider that workers can incentivize works councils through contingent monetary payments. In order to deter collusion, workers must pay higher compensations in states of nature where they can be expropriated by potential coalitions among works councils and management. Collusion makes contingent payments costly and reduces workers’ payoffs. Second, when elections are the exclusive mechanisms to align works councils’ interest, only well compensated representatives would face an intertemporal tradeoff between accepting management’s transfers at first period and losing rents at the second period. Elections increase the cost of entering on collusive behavior with management and works councils will try to behave on the employees’ interest.
    Date: 2012–11–19
  9. By: Andrea Repetto (Escuela de Gobierno, Universidad Adolfo Ibáñez)
    Date: 2012–09
  10. By: Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
    Abstract: Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to the realization of the state of the world, but he may also abuse this flexibility to exploit the agent. We capture this tradeoff in an experimental design and show that principals exhibit a strong preference for the employment contract. However, selfish principals exploit agents in one-shot interactions, inducing them to resist entering into employment contracts. This resistance to employment contracts vanishes if fairness preferences in combination with reputation opportunities keep principals from abusing their power, leading to the widespread, endogenous formation of efficient long-run employment relations. Our results inform the theory of the firm by showing how behavioral forces shape an important transaction cost of integration – the abuse of authority – and by providing an empirical basis for assessing differences between the Marxian and the Coasian view of the firm, as well as Alchian and Demsetz’s (1972) critique of the Coasian approach.
    Keywords: theory of the firm; transaction cost economics; authority; power abuse; employment relation; fairness; reputation
    JEL: C91 D23 D86 M5
    Date: 2012–11
  11. By: Bruno, Bruna
    Abstract: The paper analyzes how the debate on intrinsic motivation was imported from psychology into economics. The most important differences between the two disciplines are in the definition of intrinsic motivation and in the timing of the undermining effect of rewards. The economic framework of inter-temporal choices is proposed to reconcile the different empirical and theoretical results arising in the literature, and it is shown how rewards induce substitution and income effects depending on whether they are transitory or permanent. Furthermore, a distinction between input and output oriented intrinsic motivation is introduced.
    Keywords: intrinsic motivation; rewards; crowding out; undermining
    JEL: D03 Z1 D90
    Date: 2012–11

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