nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒12‒10
ten papers chosen by
Tommaso Reggiani
University of Cologne

  1. Which Pay for what Performance? Evidence from Executive Compensation in Germany and the United States By Moritz Heimes; Steffen Seemann
  2. What do we know about China's CEO's?: evidence from across the whole economy . By Bryson, Alex; Zhou, Minghai
  3. Investment behavior in a constrained dictator game By Coenen, Michael; Jovanovic, Dragan
  4. On Broadway and strip malls: how to make a winning team By Bel, Roland; Smirnov, Vladimir; Wait, Andrew
  5. Social capital as an engine of growth: Multisectoral modelling and implications By Youyou Baende Bofota, Raouf Boucekkine and Alain Pholo Bala
  6. Which Medicaid Buy-In Participants Use SSA Work Supports? Washington, DC: Mathematica Policy Research By Denise Hoffman; Jody Schimmel
  7. Employment Policies, Hiring Practices and Firm Performance By Blasco, Sylvie; Pertold-Gebicka, Barbara
  8. Does Increased Civil Service Pay Deter Corruption? Evidence from China By Gong, Ting; Wu, Alfred M.
  9. Stuck in the middle ? human capital development and economic growth in Malaysia and Thailand By Jimenez, Emmanuel; Nguyen, Vy; Patrinos, Harry Anthony
  10. An Ethnographer among Street-Level Bureaucrats and New Public Management By Jean-Marc Weller

  1. By: Moritz Heimes (Department of Economics, University of Konstanz, Germany); Steffen Seemann (Department of Economics, University of Konstanz, Germany)
    Abstract: This paper analyzes executive compensation in German and U.S. corporations for the period 2005-2009 including the financial crisis. We analyze the impact of stock market performance and accounting-based measures of firm performance on different compensation components. We find that only firm earnings explain total executive compensation in both samples while stock market performance does not. Cash bonus payments of German executives are explained by firm earnings and not by stock returns while U.S. bonuses are also determined by stock returns. Moreover, the sensitivity of cash bonuses to firm performance depends on firm risk and firm size. We also provide evidence that firms choose performance measures with low volatility. Finally, we find that pay-performance sensitivities are higher in the U.S. than in Germany, but have no robust explanation how long-term compensation such as company stock and options is granted in either country.
    Keywords: Pay for Performance, Executive Comepensation, Incentives
    JEL: G30 J33 M12
    Date: 2012–11–23
  2. By: Bryson, Alex; Zhou, Minghai
    Abstract: All that we know about the CEO labour market in China comes from studies of public listed companies and state-owned enterprises (SOEs). This paper is the first to examine the operation of the CEO labour market across all sectors of the Chinese economy. We do so using World Bank enterprise data for the first part of the 21st Century. Incentive schemes are commonplace throughout the economy and include contracts linking CEO pay directly to firm performance, annual bonus schemes, the posting of performance bonds, and holding company stock. These incentive mechanisms appear to complement rather than substitute for one another. The elasticity of pay with respect to company performance is one or more in two-fifths of the cases where CEO's have performance contracts, suggesting many face high-powered incentives. CEO's also face a real dismissal threat and financial penalties if they fail to deliver. Incentive contracts are used to attract the most talented executives, as indicated by educational attainment and position in the Communist Party. However, government involvement in the appointment of a CEO reduces the likelihood that the CEO will receive an incentives-based contract, perhaps because governments appoint "bureaucrats" to perform roles which incorporate social and political as well as economic goals. Firms with good corporate governance are more likely to deploy incentive contracts. A picture emerges of a well-functioning labour market for executives in China that exhibits many of the traits common to CEO labour markets in the West.
    Date: 2012–09
  3. By: Coenen, Michael; Jovanovic, Dragan
    Abstract: We analyze a constrained dictator game in which the dictator splits a pie which will be subsequently created through simultaneous investments by herself and the recipient. We consider two treatments by varying the maximum attainable size of the pie leading to either high or low investment incentives. We find that constrained dictators and recipients invest less than a model with self-interested players would predict. While the splitting decisions of constrained dictators correspond to the theoretical predictions when investment incentives are high, they are more selfish when investment incentives are low. Overall, team productivity is negatively affected by lower investment incentives. --
    Keywords: Bargaining Game,Dictator Game,Investment Incentives,Team Production
    JEL: C72 C91 D01
    Date: 2012
  4. By: Bel, Roland; Smirnov, Vladimir; Wait, Andrew
    Abstract: A successful organization - or Broadway production - needs the right team. A potential issue is that an existing synergy between complementary agents (or assets) can reduce the marginal return of effort, creating a disincentive to invest. While agents always prefer to be in a team of complementary workers, a principal may wish to use non-complementary agents; this can occur if the loss from lower investment is sufficiently large. A principal, however, may opt for non-complementary agents when complementary workers would produce greater surplus. These insights have implications for job rotation, the central­ization versus decentralization of decision making and mergers.
    Keywords: mergers; assets; job rotation; task allocation; complementarity
    Date: 2012–11
  5. By: Youyou Baende Bofota, Raouf Boucekkine and Alain Pholo Bala
    Abstract: We propose a multisector endogenous growth model incorporating social capital. Social capital only serves as an input in the production of human capital and it involves a cost in terms of the final good. We show that in contrast to existing alternative specifications, this setting assures that social capital enhances productivity gains by playing the role of a timing belt driving the transmission and propagation of all productivity shocks throughout society whatever the sectoral origin of the shocks. Further econometric work is conducted in order to estimate the contribution of social capital to human capital formation. We find that depending on the measure of social capital considered, the elasticity of human capital to social capital varies from 6% to 10%. Finally we investigate the short-term dynamics and imbalance effects properties of the models depending on the value of this elasticity (taking the Lucas-Uzawa model as a limit case). In particular, it's shown that when the substitutability of social capital to human capital increases, the economy is better equipped to surmount initial imbalances as individuals may allocate more working time in the final goods sector without impeding economic growth.
    Keywords: social capital, Human Capital, economic growth, imbalance effects
    JEL: C61 E20 E22 E24 O41
    Date: 2012
  6. By: Denise Hoffman; Jody Schimmel
    Keywords: Working with Disability, SSA Work Supports, Medicaid Buy-In, Health
    JEL: I J I
    Date: 2012–11–30
  7. By: Blasco, Sylvie (GAINS, Université du Maine); Pertold-Gebicka, Barbara (Aarhus University)
    Abstract: In this paper we investigate how active labour market policy programmes affect firms' hiring strategies and, eventually, firms' performance. We focus on counseling and monitoring which may reduce search costs for employers, but which may have ambiguous effect on the employer-employee matching quality and thus on firms' performance. Using a large scale experiment which was conducted in Denmark in 2005-2006 and induced a greater provision of activation, we find that small firms hiring in the districts where the social experiment was conducted changed their hiring practices in favor of unemployed workers and experienced greater turnover than the other firms. Treated firms also experienced no change or a marginal reduction in value added and total factor productivity during the first years after the experiment. These results are consistent with the idea that monitoring creates compulsion effects which counteract the possible improvement in the matching process expected from job search assistance.
    Keywords: active labour market programmes, counseling and monitoring, hiring decisions, firms performance
    JEL: C21 J63 J68
    Date: 2012–11
  8. By: Gong, Ting; Wu, Alfred M.
    Abstract: The temporal persistence and geographical prevalence of corruption in the world have provoked a vast amount of research into its causes. Low civil service remuneration, especially in less developed nations, is believed to be an important contributing factor to corruption. The assumption is that when salaries are low but expectations for service remains high, government officials may demand more compensation from informal or even illegal channels than what is officially sanctioned; hence, corruption arises. Accordingly, increased pay level is assumed to be effective in deterring corruption.Using China as a case, we argue that the relationship between civil service pay and corruption is not as simple as suggested. The empirical evidence gathered from China casts doubt on the assumed connection between the two to debunk the myth that increasing civil service pay contributes to the control of corruption. The article also presents the policy implications of the above analysis for human resource management and civil service governance.
    Keywords: corruption; civil service pay; efficiency wage model; relative deprivation theory
    JEL: D73
    Date: 2012
  9. By: Jimenez, Emmanuel; Nguyen, Vy; Patrinos, Harry Anthony
    Abstract: The challenge of sustaining economic growth over the long term is one that only a few countries have been able to surmount. Slowing momentum in countries like Malaysia and Thailand has led analysts and policy makers to consider what it would take to lift them out of middle-income status, where other countries have arguably become stuck. The paper examines the role of human capital formation in the quest to sustain economic growth in these two countries. It argues that a good education system is fundamental to equip workers with marketable skills. Malaysia and Thailand have successfully expanded access to schooling, but the quality of education remains an issue. Modern education systems should aim to provide universally-available quality education using the following policies: prioritize budgets to deliver quality and universally-available basic education before expanding higher levels of schooling; provide appropriate incentives and rewards to teachers; permit school autonomy and ensure accountability for results; invest in early childhood development; and consider implementing income-contingent loan financing schemes to expand higher education.
    Keywords: Education For All,Primary Education,Access&Equity in Basic Education,Teaching and Learning,Tertiary Education
    Date: 2012–11–01
  10. By: Jean-Marc Weller
    Abstract: Among the many ways of studying public administration, one orientation among social research has been gradually established: observing bureaucrats at work. Such a perspective can be seen to have two aims: a better understanding of the crucial role front-line employees can play in the daily delivery of public goods, and an empirical mapping of the different public organizations experiencing new public management measures. With an ethnographic approach based on French Administration cases and inspired particularly by science and technology studiesand workplace studies, this paper focuses on these different points.
    Keywords: Bureaucracy; civil service; public administration; new public management
    JEL: D73 H11 H83
    Date: 2012–11–27

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