nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒04‒20
twenty-one papers chosen by
Tommaso Reggiani
University of Cologne

  1. The Imprinting of Founders' Human Capital on Entrepreneurial Venture Growth: Evidence from New Technology-Based Firms By Luca Grilli; Paul H. Jensen; Samuele Murtinu
  2. Management-Employee Relations, Firm Size and Job Satisfaction By Tansel, Aysit; Gazioglu, Saziye
  4. Job market signaling with human capital investment: two quality types By Gea M. Lee; Seung Han Yoo
  5. Estimation of a Roy/Search/Compensating Differential Model of the Labor Market By Christopher Taber
  6. Entrepreneurs’ education and different variable pay schemes in Italian firms By Damiani, Mirella; Ricci, Andrea
  7. Principal-Agent and Peer Relationships in Tornaments By Gerald Eisenkopf; Sabrina Teyssier
  8. Experience Matters: Human Capital and Development Accounting By David Lagakos; Benjamin Moll; Tommaso Porzio; Nancy Qian
  9. Narcissistic CEOs and Executive Compensation By O'Reilly, Charles A. III; Doerr, Bernadette; Caldwell, David F.; Chatman, Jennifer A.
  10. Communitarianism, Oppositional Cultures, and Human Capital Contagion: Theory and Evidence from Formal versus Koranic Education By Dev, Pritha; Mberu, Blessing; Pongou, Roland
  11. Mergers, managerial incentives, and efficiencies By Jovanovic, Dragan
  12. Heterogeneity in the Production of Human Capital By Polachek, Solomon; Das, Tirthatanmoy; Thamma-Apiroam, Rewat
  13. No Brain Gain without Brain Drain? Dynamics of Return Migration and Human Capital Formation under Asymmetric Information By Ozan Hatipoglu; Serhan Sadikoglu
  14. Health, Work Intensity, and Technological Innovations By Raouf Boucekkine; Natali Hritonenko; Yuri Yatsenko
  15. Which Peers Matter? The Relative Impacts of Collaborators, Colleagues, and Competitors By Kirk B. Doran; George J. Borjas
  17. Flexibilisation without Hesitation? Temporary Contracts and Workers’ Satisfaction By Adrian Chadi; Clemens Hetschko
  18. Strategic risk in contract design By Abdolkarim Sadrieh; Guido Voigt
  19. Age Biased Technical and Organisational Change, Training and Employment Prospects of Older Workers. By Behaghel, L.; Caroli, E.; Roger, M.
  20. Exploring Tradeoffs in the Organization of Scientific Work: Collaboration and Scientific Reward By Michaël Bikard; Fiona E. Murray; Joshua Gans
  21. The effects of working time on productivity and firm performance : a research synthesis paper By Golden, Lonnie

  1. By: Luca Grilli (Department of Management, Economics, and Industrial Engineering, Politecnico di Milano); Paul H. Jensen (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Intellectual Property Research Institute of Australia, The University of Melbourne); Samuele Murtinu (Department of Management, Economics, and Industrial Engineering, Politecnico di Milano)
    Abstract: This paper tests the presence of an ‘entrepreneurial imprinting effect’ of founders’ human capital on entrepreneurial ventures’ performance. More specifically, we empirically explore the impact of entrepreneurs’ human capital on a firm’s sales growth performance by disentangling the effect of the stock of human capital possessed at foundation from the potential injections and losses of human capital due to exit of founders and/or addition of new owner-managers in the entrepreneurial team over time. Our analysis is based on a panel dataset composed of 338 Italian new technology-based firms (NTBFs) observed from 1995 (or since their foundation) to 2008 (or until their exit from the dataset). We consider the effects of several dimensions of entrepreneurial human capital on firm sales growth and estimate Gibrat law-type dynamic panel data models using OLS estimator and GMM-system estimator to control for endogeneity. Overall, our results point to a positive and significant presence of an ‘entrepreneurial imprinting effect’ exerted by founders’ specific work experience on venture growth which is robust to a series of controls.
    Keywords: Entrepreneurial ventures, imprinting effect, entrepreneurs’ human capital, firm growth, new technology-based firms
    JEL: L25 L26 O31
    Date: 2013–04
  2. By: Tansel, Aysit; Gazioglu, Saziye
    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 measues 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: D23 J21 J28
    Date: 2013–03–14
  3. By: Rajshree Agarwal; Benjamin A. Campbell; April M. Franco; Martin Ganco
    Abstract: Our study examines the mediating effect of spin-out team characteristics on the relationship between founder quality and parent and spin-out performance. Since the ability to transfer or recreate complementary assets is a critical determinant of performance, we theorize and show that founders with greater ability impact both parent firm and spin-out performance by assembling teams that represent strong complementary human capital. Using linked employee-employer US Census data from the legal services industry, we find founding team size and tenure mediate the founder quality effect. Our findings have practical implications for both managers of existing firms and aspiring founders as it relates to their human resource strategies: the factor most salient to performance is not the individual quality per se, but the manner in which it impacts the transfer and spillover of complementary human capital.
    Date: 2013–04
  4. By: Gea M. Lee (School of Economics, Singapore Management University, 90 Stamford Road, Singapore 178903); Seung Han Yoo (Department of Economics, Korea University, Seoul, Republic of Korea 136-701)
    Abstract: This paper extends the signaling model by Spence (1973) to a dynamic frame-work in which human capital and signaling have a causal relationship: human capital investment is necessary to lower the marginal cost of signaling. We provide two main results on the characterization of equilibria. First, a pooling equilibrium can induce more worker types to make a human capital investment, and second, even with a pooling inducing fewer worker types to make the investment, the pooling?s social welfare can be greater.
    Keywords: Education, Human capital, Signaling
    JEL: D63 I21 J24
    Date: 2013
  5. By: Christopher Taber (University of Wisconsin-Madison)
    Abstract: The four most important models of post-schooling wage determination in economics are al- most certainly human capital, the Roy model, the compensating differentials model, and the search model. All four lead to wage heterogeneity. While separating human capital accumulation from the others is quite common, we know remarkably little about the relative importance of the other three sources of inequality. The key aspect of the Roy model is comparative advantage in which some workers earn more than others as a result of different skill levels at labor market entry. Workers choose the job for which they achieve the highest level of earnings. By contrast, in a compensating wage differentials model a worker is willing to be paid less in order to work on a job that they enjoy more. Thus, workers with identical talent can earn different salaries. Finally, workers may have had poor luck in finding their ideal job. This type of search friction can also lead to heterogeneity in earnings as some workers may work for higher wage firms. In short, one worker may earn more than another a) because he has more talent at labor market entry (Roy Model), b) because he has accu- mulated more human capital while working (human capital), c) because he has chosen more unpleasant job (compensating differentials), or d) because he has had better luck in finding a good job (search frictions). The goal of this work is to uncover the contribution of these different components to overall earnings inequality.
    Date: 2012
  6. By: Damiani, Mirella; Ricci, Andrea
    Abstract: In this paper, we investigate the influence of the education of entrepreneurs, which we hypothesise to be a signal of talent, on the adoption of variable pay (VP) schemes in the Italian economy. We estimate to what extent differences in the diffusion of VP between Italian firms reflect differences in the quality of entrepreneurs. Our estimates, which we obtained by taking both endogeneity and unobserved heterogeneity into account, validate hypotheses about the direct positive effects of entrepreneurs’ education on the adoption of VP schemes. Furthermore, we ascertain the role of entrepreneurs’ education by examining its influence on the choice between different types of VP bonuses at the individual, group, or establishment levels. Our results suggest that highly educated entrepreneurs are more likely to use individual or collective forms of VP schemes at the establishment level rather than team VP incentives.
    Keywords: Variable pay, education
    JEL: J33 J50
    Date: 2013–04–13
  7. By: Gerald Eisenkopf (Department of Economics, University of Konstanz, Germany); Sabrina Teyssier (INRA-ALISS, Ivery sur Seine, France)
    Abstract: Social preferences explain competitive behavior between agents and reciprocity towards a principal but there is no insight into the interaction of competition and reciprocity. We conducted a laboratory experiment with two treatments to address this issue. In a conventional tournament, an agent receives either the full prize or no prize at all. The other treatment provides the same incentives but the actual payment of an agent equals her expected payment. In both treatments the principal chooses between a low and a high guaranteed payment. Standard economic theory predicts the same effort provision in all situations. Our results show that inequity between agents’ payoffs and generosity of the principal determines the effectiveness of tournaments. Moreover, the data reveal that agents focus their preferences either on the principal or on the agent.
    Keywords: Tournament, Envy, Inequity, Agency problem
    JEL: M52 D03 C90
    Date: 2013–04–11
  8. By: David Lagakos (Arizona State University); Benjamin Moll (Princeton University); Tommaso Porzio (Yale University); Nancy Qian (Yale University, NBER, CEPR, BREAD)
    Abstract: Using recently available large-sample micro data from 36 countries, we document that experience-earnings profiles are flatter in poor countries than in rich countries. Motivated by this fact, we conduct a development accounting exercise that allows the returns to experience to vary across countries but is otherwise standard. When the country-specific returns to experience are interpreted in such a development accounting framework - and are therefore accounted for as part of human capital - we find that human and physical capital differences can account for almost two thirds of the variation in cross-country income differences, as compared to less than half in previous studies.
    Keywords: Human Capital, Experience-Earnings Profiles, Development Accounting
    JEL: E24 J24 O11
    Date: 2012–12
  9. By: O'Reilly, Charles A. III; Doerr, Bernadette; Caldwell, David F.; Chatman, Jennifer A.
    Abstract: Narcissism is characterized by traits such as dominance, self-confidence, a sense ofentitlement, grandiosity, and low empathy. There is growing evidence that individuals with these characteristics often emerge as leaders, and that narcissistic CEOs may make more impulsive and risky decisions. We suggest that these tendencies may also affect how compensation is allocatedamong top management teams. Using employee ratings of personality for the CEOs of 32 prominent high-technology firms, we investigate whether more narcissistic CEO’s have compensation packages that are systematically different from their less narcissistic peers and specifically whether these differences increase the longer the CEO stays with the firm. As predicted, we find that more narcissistic CEOs who have been with their firm longer receive more total direct compensation (salary, bonus, stock options), have more money in their totalshareholdings, and have larger discrepancies between their own (higher) compensation and the other members of their team.
    Keywords: Business Administration, Management and Operations, Business/Managerial Economics, Human Resources Management and Services, Executive Compensation
    Date: 2013–03–14
  10. By: Dev, Pritha; Mberu, Blessing; Pongou, Roland
    Abstract: We analyze the implications of communitarianism-the tendency of people to organize into separate culturally homogeneous groups-for individual and group inequality in human capital accumulation. We propose a non-cooperative social interactions model where each individual decides how much time to invest in human capital versus ethnic capital, and his utility from investment in either form of capital is increasing in the investment of his ethnic group in that form of capital. We find that, in equilibrium, the demand for human capital is affected positively by individual and group ability, and negatively by group size. Moreover, two groups that are ex ante identical in ability distribution may diverge in human capital accumulation, with divergence only occurring among their low-ability members. The latter always coordinate on the same type of investment, showing a contagion or herding effect. Furthermore, we find that ethnic and group fragmentation increases the demand for human capital. We validate these predictions of the model using household data from a setting where ethnicity and religion are the primary identity cleavages. We document persistent ethnic and religious inequality in educational attainment. Members of ethnic groups that historically converted to Christianity fare better than those whose ancestors converted to Islam. Consistent with theory, there is little difference between the high-ability members of these groups, but low-ability members of historically Muslim groups choose Koranic education as an alternative to formal education. Also, the descendants of ethnic groups that were evenly exposed to both religions outperform those whose ancestors had contact with only one religion, and local ethnic fragmentation increases the demand for formal education.
    Keywords: Communitarianism, group inequality, human capital, Koranic education, contagion
    JEL: A1 A13 C7 C72 I21 J1 N3 N37
    Date: 2013–04–15
  11. By: Jovanovic, Dragan
    Abstract: We analyze the effects of synergies from horizontal mergers on managerial incentives. In contrast to synergies, efficiency gains resulting from managerial effort are not merger specific, i.e., they may be realized by all firms before and after a merger. We show that synergies suppress managerial incentives within the non-merging firms, whereas the effect on the merged firm critically depends on the number of agents employed by its principal. An important implication for merger policy is that consumer surplus may be monotonically decreasing in the synergy level, which opposes the use of an efficiency defense in merger control. --
    Keywords: Managerial Incentives,Horizontal Mergers,Antitrust,Productive Efficiency Gains,Synergies,Moral Hazard,Efficiency Defense
    JEL: D21 D86 L22 L41
    Date: 2013
  12. By: Polachek, Solomon (Binghamton University, New York); Das, Tirthatanmoy (Temple University); Thamma-Apiroam, Rewat (Kasetsart University)
    Abstract: We derive a tractable nonlinear earnings function which we estimate separately for each individual in the NLSY79 data. These estimates yield five important parameters for each individual: three ability measures (two representing the ability to learn and one the ability to earn), a rate of skill depreciation, and a time discount rate. In addition, we obtain a population wide estimate of the rental rate of human capital. To illustrate heterogeneity in the production of human capital, we plot the distribution of these parameters along with NLSY79 reported AFQT scores. By utilizing these parameters, we are able to verify a number of heretofore untested theorems based on the life-cycle human capital model. In addition, we are able to show how these human capital production function parameters relate to cognitive ability, personality traits, and family background. Among our results, we find: Black-white differences in ability are smaller than those exhibited in standardized tests. Blacks have higher time discount and skill depreciation rates than whites. Individuals with higher time discount rates and greater rates of skill depreciation have fewer years of school. Individuals with both a high internal locus of control and self-esteem exhibit greater ability, lower skill depreciation, and smaller time discount rates. Individuals inclined towards depression have higher time discount rates. Agreeable, open, conscientious and extrovert individuals have a greater ability to learn but not necessarily a greater ability to earn. Neurotic individuals have a lower ability to learn. Higher parental education is associated with a greater ability to learn, lower skill depreciation, and a smaller time discount rate. Educational stimuli, such as growing up in a household that subscribed to magazines, are associated with higher ability. Conversely, growing up poor is associated with lower ability.
    Keywords: life-cycle model, ability to learn, ability to earn, heterogeneity, earnings function
    JEL: J24 J29 J31 J39
    Date: 2013–04
  13. By: Ozan Hatipoglu; Serhan Sadikoglu
    Date: 2013–09
  14. By: Raouf Boucekkine (Aix-Marseille University (Aix-Marseille School of Economics, CNRS & EHESS, IRES and CORE, Université Catholique de Louvain.); Natali Hritonenko (Department of Mathematics, Prairie View A&M University); Yuri Yatsenko (Houston Baptist University)
    Abstract: Work significantly affects human life and health. Overworking may decrease the quality of life and cause direct economic losses. Technological innovations encourage modernization of firms’ capital and improve labor productivity in the workplace. The paper investigates the optimal individual choice of work intensity under improving technology embodied in new equipment leading to shorter lifetime of capital goods (obsolescence). The balanced growth trajectories are analyzed in this context to find out, in particular, how the optimal choice of work intensity is tied to the rate of embodied technological change. The impact of embodied technological advances on the work/life balance problem is discussed and their macroeconomic consequences are highlighted.
    Keywords: work-life balance, rational individual choice, technological development, vintage capital.
    JEL: D91 D92 O11 I10 C60
    Date: 2013–03
  15. By: Kirk B. Doran (Department of Economics, University of Notre Dame); George J. Borjas (Harvard Kennedy School, Harvard University)
    Abstract: Many economists believe that knowledge production generates positive spillovers among knowledge producers. We argue that spillovers may exist on at least three dimensions (in idea, geographic, and collaboration space), and that the strength or weakness of the spillover effects can vary across these dimensions. Using a unique data set that contains information on all publications of active mathematicians in the former Soviet Union, we examine the impact of a large post-­1992 exodus of Soviet mathematicians on the output of the non-­emigres. We find that a supply shock in the space of ideas (i.e., where the exodus consists of peers who work in similar topics) increases the output of the non-­emigres. However, neither a supply shock in geographic space (i.e., where the émigrés are members of the same university department) nor in collaboration space (i.e., where the emigres consist of coauthors) has a statistically significant effect on the output of a typical mathematician. We find evidence of human capital externalities only if the supply shock in collaboration space involves the loss of high-­quality coauthors. Spillovers, therefore, are most likely to be empirically important and dominate the competitive forces unleashed by a supply shock when high-­quality researchers are directly engaged in the joint production of new knowledge.
    Keywords: Emigration
    JEL: J6 J2
    Date: 2013–03
  16. By: Liliana Sousa
    Abstract: I find evidence that human capital spillovers have positive effects on the proclivity of low human capital immigrants to self-employ. Human capital spillovers within an ethnic community can increase the self-employment propensity of its members by decreasing the costs associated with starting and running a business (especially, transaction costs and information costs). Immigrants who do not speak English and those with little formal education are more likely to be self-employed if they reside in an ethnic community boasting higher human capital. On the other hand, the educational attainment of co-ethnics does not appear to affect the self-employment choices of immigrants with a post-secondary education to become self-employed. Further analysis suggests that immigrants in communities with more human capital choose industries that are more capital-intensive. Overall, the results suggest that the communities in which immigrants reside influences their self-employment decisions. For low-skilled immigrants who face high costs to learning English and/or acquiring more education, these human capital spillovers may serve as an alternative resource of information and labor mobility.
    Date: 2013–04
  17. By: Adrian Chadi (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Clemens Hetschko (School of Business and Economics, Freie Universitaet Berlin)
    Abstract: Fixed-term contracts are often considered a key policy tool for increasing employment. As we show that contract limitation lowers job satisfaction using data from the German Socio- Economic Panel study, we detect a drawback of promoting temporary employment that has not been identified so far. We find that the “honeymoon-hangover” effect of a new job must be taken into account to reveal this result. We examine reasons why employees suffer from temporary contracts and analyse the “Flexicurity” idea of compensating workers with security. Our findings contribute to research on workers’ well-being as well as to the debate on labour market flexibilisation.
    Keywords: labour market flexibilisation, job satisfaction, temporary contracts
    JEL: J28 J41
    Date: 2013–03
  18. By: Abdolkarim Sadrieh (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Guido Voigt (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: Supply chains facing asymmetric information can either operate in a cooperative mode with information and benefit sharing or can choose a non-cooperative form of interaction and align their incentives via screening contracts. In the cooperative mode, supply chain efficiency can be achieved, but high levels of trust and trustworthiness are required. In the non-cooperative mode, the contract mechanism guarantees a second best supply chain performance, but only if all parties choose their equilibrium strategies without trembles. Experimental evidence, however, shows that both operating modes often fail due to strategic risk. Cooperation is disrupted by deceptive signals and the lack of trust, whereas non-cooperative strategies suffer from persistent out-of-equilibrium behavior. We present an experiment on supply chain interaction with reduced strategic risk in both operating modes. We find that supply chain performance can reach a second-best level in either operating mode, if strategic risk is sufficiently reduced. We present two means to reduce strategic risk. First, a punishment mechanism leads to a better matching of trust and trustworthiness and supports the cooperative operating mode. Second, an enforcement of self-selection supports the non-cooperative equilibrium by increasing the attractiveness of screening contracts. We conclude that supply chain managers should seek to reduce the variability of the supply chain partners' behavior no matter what operating mode is considered.
    Keywords: Behavioral operations management, contracting, asymmetric information, punishment
    Date: 2013–03
  19. By: Behaghel, L.; Caroli, E.; Roger, M.
    Abstract: We analyze the role of training in mitigating the negative impact of technical and organizational changes on the employment of older workers. Using a panel of French firms in the late 1990s, our empirical analysis confirms that new technologies and some innovative workplace practices are biased against older workers. The use of the Internet and the adoption of computer networks tend to increase the wage share of middle-aged workers and to reduce the share of workers older than 50. By contrast, the reduction of the number of hierarchical layers is favourable to older workers. Training contributes to protect older workers in terms of employment and/or of wages.
    Keywords: Technical change; organizational change; training; older workers.
    JEL: J14 J24 J26 O30
    Date: 2013
  20. By: Michaël Bikard; Fiona E. Murray; Joshua Gans
    Abstract: When do scientists and other knowledge workers organize into collaborative teams and why do they do so for some projects and not others? At the core of this important organizational choice is, we argue, a tradeoff between the productive efficiency of collaboration and the credit allocation that arises after the completion of collaborative work. In this paper, we explore this tradeoff by developing a model to structure our understanding of the factors shaping researcher collaborative choices in particular the implicit allocation of credit among participants in scientific projects. We then use the annual research activity of 661 faculty scientists at one institution over a 30-year period to explore the tradeoff between collaboration and reward at the individual faculty level and to infer critical parameters in the organization of scientific work.
    JEL: O31 O33
    Date: 2013–04
  21. By: Golden, Lonnie
    Keywords: labour productivity, productivity, arrangement of working time, flexible hours of work, enterprise level, role of ILO, productivité du travail, productivité, aménagement du temps de travail, horaire de travail variable, niveau de l'entreprise, rôle de l'OIT, productividad del trabajo, productividad, ordenamiento del tiempo de trabajo, horario de trabajo variable, a nivel de la empresa, papel de la OIT
    Date: 2012

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