nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒03‒23
eleven papers chosen by
Tommaso Reggiani
University of Cologne

  1. Management-Employee Relations, Firm Size, and Job Satisfaction By Aysit Tansel; Saziye Gazioglu
  2. Authority and Incentives in Organizations By Kräkel, Matthias
  3. Seeking Alpha - Excess Risk Taking and Competition for Managerial Talent By Viral Acharya; Marco Pagano; Paolo Volpin
  4. The role of sports physicians in doping: a note on incentives By Evelyn Korn; Volker Robeck
  5. Drought Policy Revisited: A Critique of the Drought Policy Review Task Force Report By Briggs, David
  6. Investments in physical capital, relationship-specificity, and the property rights approach By Schmitz, Patrick W.
  7. Disentangling the relationship between nonprofit and social capital: the role of social cooperatives and social welfare associations in the development of networks of strong and weak ties By Giacomo, Degli Antoni; Fabio, Sabatini
  8. Learning about CEO Ability and Stock Return Volatility By Yihui Pan; Tracy Yue Wang; Michael S. Weisbach
  9. Human capital in the inner city By Dionissi Aliprantis
  10. Motivation to Work in Russia: The Case of Protracted Transition from Noncompetitive to Competitive System By Anikin, Vasiliy
  11. The Effects of Expanding the Generosity of the Statutory Sickness Insurance System By Ziebarth, Nicolas R.; Karlsson, Martin

  1. By: Aysit Tansel (Department of Economics Middle East Technical University and Institute for the Study of labor (IZA) Bonn, Germany and Economic Research Forum (ERF) Cairo, Egypt); Saziye Gazioglu (Middle East Technical University and Department of Economics, University of Aberdeen)
    Abstract: This paper investigates the job satisfaction in relation to managerial attitudes towards employees and firm size using the linked employer-employee survey results in Britain. We first investigate the management-employee relationships and the firm size using maximum likelihood probit estimation. Next various measures of job satisfaction are related to the management-employee relations via maximum likelihood ordered probit estimates. Four measures of job satisfaction that have not been used often are considered. They are satisfaction with influence over job; satisfaction with amount of pay; satisfaction with sense of achievement and satisfaction with respect from supervisors. Main findings indicate that management-employee relationships are less satisfactory in the large firms than in the small firms. Job satisfaction levels are lower in large firms. Less satisfactory management-employee relationships in the large firms may be a major source of the observed lower level of job satisfaction in them. These results have important policy implications from the point of view of the firm management while achieving the aims of their organizations in particular in the large firms in the area of management-employee relationships. Improving the management-employee relations in large firms will increase employee satisfaction in many respects as well as increase productivity and reduce turnover. The nature of the management-employee relations with firm size and job satisfaction has not been investigated before.
    Keywords: Job Satisfaction, Managerial Attitudes, Firm size, Linked Employer-Employee data, Britain.
    JEL: J28 J5 J21 D23
    Date: 2013–03
  2. By: Kräkel, Matthias (University of Bonn)
    Abstract: The paper analyzes how the choice of organizational structure leads to the best compromise between controlling behavior based on authority rights and minimizing costs for implementing high efforts. Concentrated delegation and hierarchical delegation turn out to be never an optimal compromise. If the CEO is more efficient than the division heads (i.e., the CEO's costs from exerting high effort are smaller than those of the division heads), the owner will prefer full delegation to the divisions to replace high incentive pay for motivating the division heads by incentives based on private benefits of control. In that situation, the importance of cooperative behavior between the firm's divisions determines whether decentralization or cross-authority delegation is the optimal form of full delegation. If, however, the division heads are more efficient than the CEO, then centralization or partial delegation can also be optimal.
    Keywords: authority, centralization, contracts, decentralization, moral hazard
    JEL: D21 D23 D86 L22
    Date: 2013–03
  3. By: Viral Acharya (New York University); Marco Pagano (University of Naples "Federico II" and EIEF); Paolo Volpin (London Business School)
    Abstract: We present a model in which managers are risk-averse and firms compete for scarce managerial talent (“alpha”). When managers are not mobile across firms, firms provide efficient compensation, which allows for learning about managerial talent and for insurance of low-quality managers. When instead managers can move across firms, firms cannot offer co-insurance among employees. In anticipation, risk-averse managers may churn across firms or undertake aggregate risks in order to delay the revelation of their true quality. The result is excessive risk-taking with pay for short-term performance and an accumulation of long-term risks. We conclude with a discussion of policies to address the inefficiency in compensation.
    Date: 2013
  4. By: Evelyn Korn (University of Marburg); Volker Robeck (University of Marburg)
    Abstract: How to ban the fraudulent use of performance-enhancing drugs is an issue in all professional - and increasingly in amateur - sports. The main effort in enforcing a “clean sport” has concentrated on proving an abuse of performance-enhancing drugs and on imposing sanctions on teams and athletes. An investigation started by Freiburg university hospital against two of its employees who had been working as physicians for a professional cycling team has drawn attention to another group of actors: physicians. It reveals a multi-layered contractual relations between sports teams, physicians, hospitals, and sports associations that provided string incentives for the two doctors to support the use performance-enhancing drugs. This paper argues that these misled incentives are not singular but a structural part of modern sports caused by cross effects between the labor market for sports medicine specialists (especially if they are researchers) and for professional athletes.
    Date: 2013
  5. By: Briggs, David
    Keywords: Labor and Human Capital,
    Date: 2013–03–04
  6. By: Schmitz, Patrick W.
    Abstract: We reconsider the property rights approach to the theory of the firm based on incomplete contracts. We explore the implications of different degrees of relationship-specificity when there are two parties, A and B, who can make investments in physical capital (instead of human capital). If relationship-specificity is exogenously given, it turns out that joint asset ownership can be optimal only if the degree of relationship-specificity is sufficiently small. If relationship-specificity can be freely chosen and if party A's investments are more productive, then the parties deliberately choose a strictly positive level of relationship-specificity and they always agree on sole ownership by party A.
    Keywords: ownership, incomplete contracts, relationship-specificity, theory of the firm, investment incentives
    JEL: C78 D23 D86 L14 L22 L24 M21
    Date: 2013–03
  7. By: Giacomo, Degli Antoni; Fabio, Sabatini
    Abstract: We use a unique dataset to study how participation in two specific types of nonprofit organizations, i.e. social welfare associations and social cooperatives, affects individual social capital. A descriptive analysis shows that both the types of organization have a positive impact. The econometric analysis reveals that social welfare associations play a significantly greater role in the development of volunteers’ networks of cooperative relationships, favouring the creation of weak ties which are used to exchange information and advice, and offering the opportunity to establish stronger ties entailing concrete mutual support. Within social cooperatives, workers develop their individual social capital to a greater extent than volunteers.
    Keywords: volunteering, nonprofit organizations, cooperative enterprises, social cooperatives, social capital, social networks
    JEL: L31 L33 P13 Z1
    Date: 2013–03–08
  8. By: Yihui Pan; Tracy Yue Wang; Michael S. Weisbach
    Abstract: When there is uncertainty about a CEO’s quality, news about the firm causes rational investors to update their expectation of the firm’s profitability for two reasons: Updates occur because of the direct effect of the news, and also because the news can cause an updated assessment of the CEO’s quality, affecting expectations of his ability to generate future cash flows. As a CEO’s quality becomes known more precisely over time, the latter effect becomes smaller, lowering the stock price reaction to news, and hence lowering the stock return volatility. Thus, in addition to uncertainty about fundamentals, uncertainty about CEO quality is also a source of stock return volatility, which decreases over a CEO’s tenure as the market learns the CEO’s quality more accurately. We formally model this idea, and evaluate its implications using a large sample of CEO turnovers in U.S. public firms. Our estimates indicate that there is statistically significant and economically important market learning about CEO ability, even for CEOs whose appointments appear to be unrelated to their predecessors’ performance. Also consistent with the learning model is the fact that the learning curve appears to be convex in time, and learning is faster when there is higher ex ante uncertainty about the CEO’s ability and more transparency about the firm’s prospects. Overall, uncertainty about management quality appears to be an important source of stock return volatility.
    JEL: G32 G34 M12 M51
    Date: 2013–03
  9. By: Dionissi Aliprantis
    Abstract: Black males in the United States are exposed to tremendous violence at young ages: In the NLSY97 26 percent report seeing someone shot by age 12, and 43 percent by age 18. This paper studies how this exposure to violence and its associated social isolation affect education and labor market outcomes. I use Elijah Anderson’s ethnographic research on the “code of the street” to guide the specification of a model of human capital accumulation that includes street capital, the skills and knowledge useful for providing personal security in neighborhoods where it is not provided by state institutions. The model is estimated assuming either selection on observables or dynamic selection with permanent unobserved heterogeneity. Counterfactuals from these estimated models indicate that exposure to violence has large effects, decreasing the high school graduation rate between 6.1 and 10.5 percentage points (20 and 35 percent of the high school dropout rate) and hours worked between 3.0 and 4.0 hours per week (0.15 and 0.19 s).
    Keywords: Occupational choice ; Human capital ; Income distribution
    Date: 2013
  10. By: Anikin, Vasiliy
    Abstract: This paper aims to determine what challenges Russia faces upon transitioning to a competitive system. As a main characteristic of the labour force, the motivation to work is studied in terms of three dimensions: 1) the value of current work, 2) orientation to a potential job, and 3) aspirations with respect to work. Analysis revealed the existence in Russia of homogeneous groups of workers, in terms of their motivation; this status quo is typical of both late-industrial and postindustrial societies. The author therefore argues for the complexity of ‘competitive areas’ and the simplicity of ‘noncompetitiveness’ in contemporary Russia. Meanwhile, the socioeconomic limitations to the proliferation of intrinsic and nonhygiene motivations on the one hand, and the predominance of monetary and extrinsic motivations on the other, provide evidence that one should consider Russia a country in protracted transition.
    Keywords: transition, modernization, motivation to work, labour force, Russia
    JEL: O10 P29 P39
    Date: 2013–01–20
  11. By: Ziebarth, Nicolas R. (Cornell University); Karlsson, Martin (University of Duisburg-Essen)
    Abstract: This article evaluates an expansion of employer-mandated sick leave from 80 to 100 percent of forgone gross wages in Germany. We employ and compare parametric difference-in-difference (DID), matching DID, and mixed approaches. Overall workplace attendance decreased by at least 10 percent or 1 day per worker per year. We show that taking partial compliance into account increases coefficient estimates. Further, heterogeneity in response behavior was of great importance. There is no evidence that the increase in sick leave improved employee health, a finding that supports a shirking explanation. Finally, we provide evidence on potential labor market adjustments to the reform.
    Keywords: generosity of social insurance, difference-in-differences estimation, sickness absence, employer sick leave mandate, natural experiment, SOEP
    JEL: H51 I18 J22 J32
    Date: 2013–02

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