nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒05‒11
eighteen papers chosen by
Tommaso Reggiani
University of Cologne

  1. The relationship between slack resources and the performance of entrepreneurial firms: The role of venture capital and angel investors. By T. VANACKER; V. COLLEWAERT; I. PAELEMAN
  2. The effect of employee workplace representation on firm performance. A cross-country comparison within Europe By Van den Berg A.; Grift Y.; Van Witteloostuijn A.; Boone Ch.; Van der Brempt O.
  3. Repeated Moral Hazard with Worker Mobility via Directed On-the-Job Search By Kunio Tsuyuhara
  4. Invest in the best or compensate the weak? An empirical analysis of the heterogeneity of a firm’s provision of human capital By Samuel Muehlemann; Romy Braendli; Stefan C. Wolter
  5. Skill Uncertainty, Skill Accumulation, and Occupational Choice By Carl Sanders
  6. Absorptive capacity, innovation cooperation and human-capital. Evidence from 3 European countries By Chiara Franco; Alberto Marzucchi; Sandro Montresor
  7. The Heterogeneous Effects of Workforce Diversity on Productivity, Wages and Profits By Garnero, Andrea; Rycx, Francois
  8. Does Monitoring Work? A Field Experiment with Multiple Forms of Counterproductive Behaviour By Michèle Belot; Marina Schröder
  9. Female Labour Supply, Human Capital and Welfare Reform By Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan M. Shaw
  10. "An Interval Regression Analysis for Tenures of Japanese Elder Care Workers Using Matched Employer-Employee Data" By Shinya Sugawara
  11. Firm Entry Deregulation, Competition and Returns to Education and Skill By Ana P. Fernandes; Priscila Ferreira; L. Alan Winters
  12. Globalization, occupational restructuring and firm performance By Maliranta, Mika
  13. Managers versus students: new approach in improving capital structure education By Miglo, Anton
  14. Interviews and the Assignment of Workers to Jobs By Ronald Wolthoff; Benjamin Lester
  15. Workers on the move: migrated labour in post-reform india By Majumder, Rajarshi
  16. Financial Hurdles for Human Capital Accumulation: Revisiting the Galor-Zeira Model By Jun, Bogang; Hwang, Won-Sik
  17. Gender and other determinants of trust and reciprocity in an experimental labour market amongst Chinese students By Uwe Dulleck; Jonas Fooken; Yumei He
  18. “Double Penalty in Returns to Education: Informality and Educational Mismatch in the Colombian Labour market” By Paula Herrera; Enrique López-Bazo; Elisabet Motellón

    Abstract: In this study, we seek to further delineate factors that condition the relationship between slack resources and firm performance. To do so, we develop and test a model that establishes the role of venture capital (VC) and angel investors as powerful external stakeholders who positively moderate the slack-performance relationship. In addition, we provide more insight into this relationship by examining differences between these two types of private investors and by examining the role of their ownership stakes. We test our hypotheses using a sample of 1,215 private firms, including VC-backed firms, angel-backed firms and similar firms without such investors. We find that the presence of VC investors positively moderates the relationship between both financial and human slack resources and firm performance, while angel investors only positively moderate the effect of human resource slack. Further, VC investors are only marginally better at helping entrepreneurs to extract value from human resource slack than angel investors and they are no better when it comes to financial slack. Finally, we find that the impact of financial and human resource slack on firm performance is more positive in VC-backed firms when investors hold high ownership stakes, an effect which is significantly stronger than when angel investors hold high ownership stakes.
    Date: 2013–04
  2. By: Van den Berg A.; Grift Y.; Van Witteloostuijn A.; Boone Ch.; Van der Brempt O.
    Abstract: In this paper, we contribute to the extant Industrial Relations literature, which is almost completely confined to estimating the effects of worker participation within a single country, by conducting a comparative multi-country study using unique data from the European Company Survey 2009. We compare representation regimes within the European Union. We categorize the EU Member States into five clusters with similar participation characteristics: the Germanic, French, Anglo-Saxon, Scandinavian and transition cluster. Across these clusters, we first estimate the effects of the presence of what we refer to as an information and consultation body on firm performance, measured by economic performance of the establishment as assessed by managers-respondents. Second, we estimate the effects of managerial attitudes on performance, as we assume – and find – that only taking into account the mere presence of a worker representation is insufficient, as mutual understandings between management and employee representatives affect the functioning of the employee representation body, and hence firm performance.
    Date: 2013–04
  3. By: Kunio Tsuyuhara (University of Calgary)
    Abstract: This paper proposes a search theoretic model of optimal employment contract under repeated moral hazard. The model integrates two important attributes of the labour market: workers' work incentive on the job and their mobility in the labour market. The optimal long-term contract is characterized by an increasing wage-tenure profile. The labour productivity of a match also increases with tenure due to a worker's increasing effort provision. Even though all workers and firms are ex ante homogeneous, these two outcomes jointly generate endogenous heterogeneity of the wages and labour productivity. It is also shown that the interaction of these factors provides novel implications for wage dispersion, and the calibrated model generates significantly larger wage dispersion than previous studies.
    Date: 2012
  4. By: Samuel Muehlemann (University of Bern and IZA Bonn); Romy Braendli; Stefan C. Wolter (University of Bern, CESifo & IZA)
    Abstract: The paper aims to test whether a firm’s provision of training depends on the intake quality of trainees. While a firm may just treat each trainee equally, independent of his or her intake quality, firms may alternatively also provide more training to less able individuals or focus on the most able ones. We develop a theoretical framework that illustrates under what circumstances a firm chooses a particular training strategy. We use representative administrative survey data for more than 1400 Swiss establishments. To test our theoretical predictions about a firm’s training strategy, we apply multivariate and instrumental variable (IV) regression models. In addition, we use case study evidence from a large Swiss retailer, allowing us to analyze how different instructors in a specific firm react when confronted with apprentices of different intake qualities. We find that a firm’s training strategy depends on a trainee’s intake quality and the expected net costs of a particular training occupation. Although firms generally provide less training to less qualified trainees, we find that a firm is willing to compensate low-ability trainees with additional training when training is on average profitable in the short run. When training regulations force firms to follow an investment-oriented training strategy (net costs in the short run), then low-ability trainees will not receive additional instruction time and the dropout risk increases. Generating a regulatory framework that allows firms to achieve a net benefit from work-based training is crucial for low-ability trainees to have the opportunity to receive additional training investments that compensate for a lack of competences at the time of the start of training.
    Keywords: Work-based training, heterogeneous trainee ability, apprenticeship training, firm-sponsored training
    JEL: J24 M53
    Date: 2013–05
  5. By: Carl Sanders (Washington University in St. Louis)
    Abstract: Workers entering the labor market are uncertain about their skill set. Standard human capital theory assumes workers have perfect information about their skills. In this paper, I argue that skill uncertainty can explain one type of worker moves that standard human capital theory cannot: moves between jobs where they perform different kinds of tasks. I consider workers who have a multi-dimensional bundle of labor market skills and begin their careers uncertain about their skill levels. I construct a model that links learning about skills to the tasks performed in jobs: the more intensely a job uses a particular skill, the more the workers learn about their true level of that skill. The model also contains a skill accumulation motive: as workers use a skill they gain additional amounts of it. A simpliï¬Âed version of the model suggests that if skill uncertainty were the dominant force workers would switch between jobs that use skills in different ratios but similar total levels. On the other hand, if skill accumulation were the dominant force they would switch between jobs that use similar ratios of skills but higher total levels. Linking data on workers from the National Longitudinal Study of Youth 1979 with occupational characteristics from the US Department of Labor O*NET database, I show that worker mobility across different task mixes is common and I estimate the model parameters. The current results indicate that skill uncertainty explains approximately 30% of worker mobility across different task ratios.
    Date: 2012
  6. By: Chiara Franco (Catholic University of Milan); Alberto Marzucchi (Catholic University of Milan); Sandro Montresor (JRC-IPTS)
    Abstract: The paper aims at extending the analysis of the firm’s absorptive capacity (AC) by taking stock of its manifold nature. Innovation cooperation is recognised as one of its antecedents, along with R&D, but with different possible outcomes, depending on the kind of partner. Human capital is claimed to be as important as other organisational mechanisms for the AC impact on innovation. The empirical application, carried out on about 10,500 firms located in 3 EU countries (i.e. Germany, Italy and Spain), confirms the role of these factors. Interacting with research organisations, for example, increases the firm’s AC providing it occurs within the national boundaries. The transformation of AC into actual innovation is favoured by the human capital of the firm, while it is actually hampered by socialisation mechanisms of an organisational nature.
    Keywords: Absorptive capacity, Innovation cooperation, Human capital
    JEL: O33 O32 J24
    Date: 2012–11
  7. By: Garnero, Andrea (Paris School of Economics); Rycx, Francois (Free University of Brussels)
    Abstract: We estimate the impact of workforce diversity on productivity, wages and productivity-wage gaps (i.e. profits) using detailed Belgian linked employer-employee panel data. Findings, robust to a large set of covariates, specifications and econometric issues, show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. The consequences of gender diversity are found to depend on the technological/knowledge environment of firms. While gender diversity generates significant gains in high-tech/ knowledge intensive sectors, the opposite result is obtained in more traditional industries. Overall, findings do not point to sizeable productivity-wage gaps except for age diversity.
    Keywords: wages, productivity, labour diversity, linked panel data, GMM
    JEL: D24 J24 J31 M12
    Date: 2013–04
  8. By: Michèle Belot (School of Management, University Edinburgh); Marina Schröder (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: This paper provides .eld experimental evidence on the effects of monitoring in a context where workers can engage in various forms of counterproductive behaviour and only one of them is monitored and incentivised. We hire students to do a job for us (identifying euro coins) for which they are paid a .at fee. There are various ways they can behave counterproductively: they can perform sloppily, not complete the task within the requested time or even steal some of the coins. We study how monitoring one productivity dimension (sloppiness) spills over to others (tardiness and theft). We find that introducing lax monitoring does not improve performance, but increases tardiness substantially. Strict monitoring increases tardiness to the same extent, but also leads to substantial improvements in performance. Theft, on the other hand, occurs more rarely and its prevalence is not affected by the monitoring scheme. We conclude that monitoring does have a discipling effect on workers, but at the same time, workers retaliate for being monitored and do so in the least costly manner for themselves (both in monetary and non-monetary terms).
    Keywords: counterproductive behaviour, monitoring, experiment
    JEL: C93 J24 J30 M42 M52
    Date: 2013–04
  9. By: Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan M. Shaw
    Abstract: We consider the impact of Tax credits and income support programs on female education choice, employment, hours and human capital accumulation over the life-cycle. We thus analyze both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings we are also able to quantify the insurance value of alternative programs. We find important incentive effects on education choice, and labor supply, with single mothers having the most elastic labor supply. Returns to labour market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education. For those with lower education the welfare programs are shown to have substantial insurance value. Based on the model marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group.
    JEL: H2 H3 I21 J22 J24 J31
    Date: 2013–05
  10. By: Shinya Sugawara (Faculty of Economics, University of Tokyo)
    Abstract:       This paper analyzes job tenures of Japanese elder care workers in the home care service sector, using an econometric framework that can fully utilize information of available data. This sector reveals a large betweenfirm difference in workers' separation rates, despite a regulation policy that induces a limited wage dispersion. I rationalize this puzzling observation by a screening model in which firms try to avoid adverse selection caused by information asymmetry regarding workers' motivation. My model induces a separating equilibrium in which several firms cover training costs for general human capital accumulation of workers. To examine a testable implication of my screening model, I construct an interval regression model using cross-section data with matched employer-employee information. A standard Bayesian estimation provides empirical results that support my economics model.
    Date: 2013–04
  11. By: Ana P. Fernandes (University of Exeter); Priscila Ferreira (NIMA, Universidade do Minho); L. Alan Winters (University of Sussex, CEPR, CEP and IZA)
    Abstract: This paper studies the effect of firm entry deregulation on the returns to skill and education. We use matched employer-employee data for the universe of workers and firms in Portugal and exploit a comprehensive episode of entry deregulation, unique in the industrialized world, as a quasi-natural experiment to investigate how increased competition affects wages. We find that after the reform the returns to a university degree increased by around 5 percent and the returns to skills increased by around 3 percent. We include match (worker-firm) fixed effects and thus identify the effect from individuals who stay in the same firm after the reform. Results are therefore not driven by changes in employment composition, and are supportive of education and skill becoming more valuable after the reform.
    Keywords: Entry, Deregulation, Product Market Competition, Wage Structure, Returns to Education
    JEL: J3
    Date: 2013–04
  12. By: Maliranta, Mika
    Abstract: In this study, the patterns of occupational restructuring and their micro-level mechanisms are examined by applying standard measures of job and worker flows at the occupation and firm levels using longitudinal employeremployee data from the Finnish business sector for the years 2000-2006. Special attention is given to determining how global firms (i.e., multinational enterprises and offshoring firms) contribute to occupational restructuring and to establishing the role of occupational structures when explaining productivity and profitability gaps between global and local firms. The findings indicate that global firms have contributed to reshaping occupational structures, and although this contribution is clearly reflected in their productivity, it is not as clearly reflected in their profitability.The findings imply that employees have captured a dominant share of the productivity advantage of global firms.
    Keywords: globalization, offshoring, occupational restructuring, productivity, profitability
    JEL: J24 F23
    Date: 2013–01–29
  13. By: Miglo, Anton
    Abstract: According to Graham and Harvey (2001), an immense gap exists between capital structure theories and practice. By analyzing students’ perception of capital structure theories and the differences between their opinion and that of the current CEO’s and managers this paper argues that this can be partially explained by current educational practices. Educators mostly focus on one or maybe two most popular theories and students have much smaller knowledge about other theories. Secondly educational practices favor trade-off theory to asymmetric information based theories. The paper provides some suggestions regarding capital structure education and future research.
    Keywords: capital structure education, trade-off theory, pecking-order theory, shareholders-bondholders conflict, life cycle theory, flexibility theory, debt and discipline
    JEL: G32 I21 I22
    Date: 2012
  14. By: Ronald Wolthoff (University of Toronto); Benjamin Lester (Federal Reserve Bank of Philadelphia)
    Abstract: This paper studies the effect of screening costs on the equilibrium allocation of workers with different productivities to firms with different technologies. In the model, a worker's type is private information, but can be learned by the firm during a costly screening or interviewing process. We characterize the planner's problem in this environment and determine its solution. A firm may receive applications from workers with different productivities, but should in general not interview them all. Once a sufficiently good applicant has been found, the firm should instead make a hiring decision immediately. We show that the planner's solution can be decentralized if workers direct their search to contracts posted by firms. These contracts must include the wage that the firm promises to pay to a worker of a particular type, as well as a hiring policy which indicates which types of workers will be hired immediately, and which types will lead the firm to keep interviewing additional applicants.
    Date: 2012
  15. By: Majumder, Rajarshi
    Abstract: Migration is a universal phenomenon. From time immemorial women and men have travelled in search of better living. Historical nomadic instinct of man had been in tune with his necessities – more endurable climate, adequate water supply, fertile land and general availability of resources have attracted the human being always. It is expected that with development migration of due to Push factors will decrease while that due to Pull factors will increase. One of the important facets of labour market is therefore the profile of migrant workers and the nature of their movements. In spite of extensive work on migration in Indian context, recent studies on migration in India have focussed mainly on rural-urban migration or on migration from/between specific regions. The present paper explores the post reform nature of migration in India with special focus on migrant workers. Types of movement, profile of migrants vis-a-vis the natives, occupational distribution, and wages received by them have been examined. This has been contrasted with the pre-reform situation. Whether wage setting process is different for migrants is also examined through estimation of the wage function. Results suggest that migration among males are more of an ‘assured’ type rather than a ‘search’ type, in response to regular wage employment, where the better endowed / skilled / trained are moving. Pull factors are definitely playing more important role than push factors in this regard, though in post-reform period push factors have strengthened. Though better-off states with lower incidence of poverty and higher per capita income have higher migration rates, net out migration rates are considerably higher for poorer states indicating that condition of the source region is perhaps the most important factor in migration decisions.
    Keywords: Migration; Wage Setting; Human Capital;
    JEL: J24 J31 O15 R23
    Date: 2012–09–15
  16. By: Jun, Bogang; Hwang, Won-Sik
    Abstract: Against the background of inconclusive evidence about the inequality–growth relation, this paper suggests that the level of inequality increases via the human capital channel with credit market imperfections and that this increasing inequality negatively affects economic growth. We expand the model presented by Galor and Zeira (1993) to represent the fact that the economy benefits from endogenous technological progress and that the government provides financial aid to reduce the financial hurdles for human capital accumulation. The presented empirical results, using Korean data from 1998 to 2008, imply that education plays a significant role in the divergence of household wealth over time and that the government’s financial aid package in the form of the new student loans program positively influences equality and short-run economic growth by promoting the number of skilled workers.
    Keywords: Human Capital, Growth, Inequality
    JEL: I24 I25 O15
    Date: 2012–12–31
  17. By: Uwe Dulleck; Jonas Fooken; Yumei He
    Abstract: Due to economic and demographic changes highly educated women play an important role on the Chinese labour market. Gender has been shown to be an important characteristic that influences behaviour in economic experiments, as have, to a lesser degree, academic major, age and income. We provide a study looking at trust and reciprocity and their determinants in a labour market laboratory experiment. Our experimental data is based on two games, the Gift Exchange Game (GEG) and a variant of this game (the Wage Promising Game, WPG) where the employer's wage offer is non-binding and the employer can choose the wage freely after observing the workers effort. We find that women are less trusting and reciprocal than men in the GEG while this cannot be found in the WPG. Letting participants play the GEG and the WPG, allows us to disentangle reciprocal and risk attitudes. While in the employer role, it seems to be that risk attitude is the main factor, this is not confirmed analysing decisions in the worker role.
    Date: 2013–05–01
  18. By: Paula Herrera (Faculty of Economics, University of Barcelona); Enrique López-Bazo (Faculty of Economics, University of Barcelona); Elisabet Motellón (Faculty of Economics, University of Barcelona)
    Abstract: This paper examines the returns to education taking into consideration the existence of educational mismatches in the formal and informal employment of a developing country. Results show that the returns of surplus, required and deficit years of schooling are different in the two sectors. Moreover, they suggest that these returns vary along the wage distribution, and that the pattern of variation differs for formal and informal workers. In particular, informal workers face not only lower returns to their education, but suffer a second penalty associated with educational mismatches that puts them at a greater disadvantage compare to their formal counterparts.
    Keywords: Educational Mismatch; Formal/Informal Employment; Economic Development; Wage Gap. JEL classification: O17; J21; J24.
    Date: 2013–05

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