nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒05‒22
thirteen papers chosen by
Tommaso Reggiani
University of Cologne

  1. Firing Threats and Tenure: Incentive effects and impression management By Brice Corgnet; Roberto Hernán-Gonzalez; Stephen Rassenti
  2. Corruption, Public Expenditure, and Human Capital Accumulation By Spyridon Koikos
  4. What Determines Trust? Human Capital vs. Social Institutions : Evidence from Manila and Moscow By John V.C. Nye; Grigory Androuschak; Desirée Desierto; Garett Jones; Maria Yudkevich
  5. The Process of Wage Adjustment: An Analysis Using Establishment- Level Data By Alberto Bayo-Moriones; Jose Enrique Galdon-Sanchez; Sara Martinez-de-Morentin
  6. Managerial Incentives and the Role of Advisors in the Continuous-Time Agency Model By Hiroshi Osano; Keiichi Hori
  7. Decision–Making and Implementation in Teams By Jordi Blanes i Vidal; Marc Möller
  8. Dynamics of Investment and Firm Performance: Comparative Evidence from Manufacturing Industries By Marco Grazzi; Nadia Jacoby; Tania Treibich
  9. Intergenerational Attitudes Towards Strategic Uncertainty and Competition: A Field Experiment in a Swiss Bank By Thierry Madiès; Marie-Claire Villeval; Malgorzata Wasmer
  10. Worker or Shirker – Who Evades More Taxes? A Real Effort Experiment By Christoph Bühren; Torben C. Kundt
  11. The Government Workforce of the Future: Innovation in Strategic Workforce Planning in OECD Countries By Oscar Huerta Melchor
  12. Aging and Pension Reform: Extending the Retirement Age and Human Capital Formation By Edgar Vogel; Alexander Ludwig; Axel Börsch-Supan
  13. Battle of the (Same) Sexes: How We Take Advantage of Presumed Trust from Same-Gender Others and Rationalize to the Contrary By Van Sant, Alex B.; Kray, Laura J.

  1. By: Brice Corgnet (Chapman University); Roberto Hernán-Gonzalez (Universidad de Granada); Stephen Rassenti (Economic Science Institute, Chapman University)
    Abstract: We study the effect of firing threats and tenure in a virtual workplace that reproduces features of existing organizations. We show that organizations in which bosses can fire up to one third of their workforce produce twice more than organizations for which firing is not possible. Firing threats sharply decrease on-the-job leisure activities. Nevertheless, organizations endowed with firing threats significantly underperformed those using individual incentives. Our analysis also indicates that, in the presence of firing threats, employees engage in impression management activities in order to be seen as hard-working individuals. These results are consistent with the predictions of our theoretical model in which workers aim at signaling a high level of intrinsic motivation to increase their chance of obtaining tenure. Finally, we show that production levels dropped substantially under tenure while on-the-job leisure surged.
    Keywords: Firing threats, tenure, incentives, impression management
    JEL: C92 D23 D82
    Date: 2013
  2. By: Spyridon Koikos (University of Milan, Italy)
    Abstract: In this paper we investigate the effect of corruption on human capital accumulation through two channels. The first channel is through the effect of corruption on the public expenditure on education and the second channel is through the effect of corruption on the physical capital investment. Public expenditure on education affects positively human capital, while physical capital can obsolete human capital. Initially, we construct an endogenous two-sector growth model with human capital accumulation and by considering corruption as an exogenous variable we try to explore the impact of corruption on the allocation of public expenditure and as such on the distribution of human capital across different sectors. The theoretical model’s results suggest that corruption has different effects on human capital accumulation through the two channels. Then we use a smooth coefficient semiparametric model to capture possible non-linearities, and the results support the existence of nonlinearities between human capital and corruption.
    Keywords: Corruption; Public Expenditure; Economic Growth; Human Capital Investment; Semiparametric Estimation
    JEL: D73 H52 J24 O41 O47
    Date: 2013–02
  3. By: Elizabeth Ananat; Shihe Fu; Stephen L. Ross
    Abstract: We demonstrate a striking but previously unnoticed relationship between city size and the black-white wage gap, with the gap increasing by 2.5% for every million-person increase in urban population. We then look within cities and document that wages of blacks rise less with agglomeration in the workplace location, measured as employment density per square kilometer, than do white wages. This pattern holds even though our method allows for non-parametric controls for the effects of age, education, and other demographics on wages, for unobserved worker skill as proxied by residential location, and for the return to agglomeration to vary across those demographics, industry, occupation and metropolitan areas. We find that an individual’s wage return to employment density rises with the share of workers in their work location who are of their own race. We observe similar patterns for human capital externalities as measured by share workers with a college education. We also find parallel results for firm productivity by employment density and share college-educated using firm racial composition in a sample of manufacturing firms. These findings are consistent with the possibility that blacks, and black- majority firms, receive lower returns to agglomeration because such returns operate within race, and blacks have fewer same-race peers and fewer highly-educated same-race peers at work from whom to enjoy spillovers than do whites. Data on self-reported social networks in the General Social Survey provide further evidence consistent with this mechanism, showing that blacks feel less close to whites than do whites, even when they work exclusively with whites. We conclude that social distance between blacks and whites preventing shared benefits from agglomeration isa significant contributor to overall black-white wage disparities.
    Keywords: Black White Wage Gap, Agglomeration Economies, Human Capital Externalities,Information Networks, Total Factor Productivity
    JEL: J15 J24 J31 R23 R32
    Date: 2013–04
  4. By: John V.C. Nye (Department of Economics, George Mason University and Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow); Grigory Androuschak (Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow); Desirée Desierto (School of Economics, University of the Philippines Diliman); Garett Jones (Department of Economics, George Mason University); Maria Yudkevich (Laboratory for Institutional Analysis of Economic Reforms, Higher School of Economics, Moscow)
    Abstract: It is now well established that highly developed countries tend to score well on measures of social capital and have higher levels of generalized trust. In turn, the willingness to trust has been shown to be correlated with various social and environmental factors (e.g. institutions, culture) on one hand, and accumulated human capital on the other. To what extent is an individual’s trust driven by contemporaneous institutions and environmental conditions and to what extent is it determined by the individual’s human capital? We collect data from students in Moscow and Manila and use the variation in their height and gender to instrument for measures of their human capital to identify the causal effect of the latter on trust. We find that human capital positively affects the propensity to trust, and its contribution appears larger than the combined effect of other omitted variables including, plausibly, social and environmental factors.
    Date: 2012–11
  5. By: Alberto Bayo-Moriones (Departamento de Gestión de Empresas-UPNA); Jose Enrique Galdon-Sanchez (Departamento de Economía-UPNA); Sara Martinez-de-Morentin (Departamento de Economía-UPNA)
    Abstract: In this article, we use data from Spanish manufacturing plants to analyze the determinants of the importance attributed to several criteria when wages are adjusted. More specifically, the criteria we take into account in the study are the cost of living, the wages of the firm in relation to its competitors, the fulfillment of collective agreements at sector level, the need to recruit and retain employees, the performance of the organization, and the industrial relations climate. Our results show that the structural characteristics of the establishment, as well as the wage setting arrangements and trade unions, play a role in explaining the importance of the factors mentioned in shaping wage adjustments. The human resource management policies adopted by the employer seem to be less relevant.
    Keywords: human resource management, structural characteristics, trade unions, wage adjustment, wage setting arrangements
    Date: 2013
  6. By: Hiroshi Osano (Institute of Economic Research, Kyoto University); Keiichi Hori (Faculty of Economics, Ritsumeikan University)
    Abstract: This paper explores a continuous-time agency model with double moral hazard. Using a venture capitalist—entrepreneur relationship where a manager provides unobservable effort while a venture capitalist (VC) both supplies unobservable effort and chooses the optimal timing of the initial public offering (IPO) with an irreversible investment, we show that optimal IPO timing is earlier under double moral hazard than under single moral hazard. Our results also indicate that the manager's compensation tends to be paid earlier under double moral hazard. We also derive several comparative static results for the IPO timing and managerial compensation profile, all of which provide new empirically testable implications. Usefully, even where the VC does not completely exit with the IPO, such that there is a requirement for a multiagent analysis after the IPO, most of our results remain unchanged. In addition, our model applies to not only the VC exit through the M&A (Mergers and Acquisitions) process but also the dissolution of joint ventures and corporate spin-offs.
    Keywords: two-sided moral hazard, IPO timing, managerial compensation, dynamic incentives, spin-offs
    JEL: D82 D86 G24 G34 M12 M51
    Date: 2013–02
  7. By: Jordi Blanes i Vidal; Marc Möller
    Abstract: We use a mechanism-design approach to study a team whose members choose a joint project and exert individual efforts to execute it. Members have private information about the qualities of alternative projects. Information sharing is obstructed by a trade-off between adaptation and motivation. We determine the conditions under which first-best project and effort choices are implementable and show that these conditions can become relaxed as the team grows in size. This contrasts with the common argument (based on free-riding) that efficiency is harder to achieve in larger teams. We also characterize the second-best mechanism and find that decision-making may be biased either in favor or against the team's initially preferred alternative.
    Keywords: teams, adaptation, motivation, decision–making, incentives
    JEL: D02 D23 L29
    Date: 2013–05
  8. By: Marco Grazzi; Nadia Jacoby; Tania Treibich
    Abstract: Although the relation between investment and economic growth has been well established in the macroeconomic literature, the existence of a similar link at firm level has been challenged by empirical work. This paper investigates the channels linking investment and firm performance in the French and Italian manufacturing industries by proposing a novel methodology to identify investment spikes, which corrects for size dependence. While maintaining the desired properties of a spike measure, our chosen proxy accounts for the expected relation between investment and firm performance. Ex-ante, more efficient and fast growing firms demonstrate a higher probability to invest; in turn, following an investment spike, the group of investing firms shows further performance gains. We show also that expansionary investment episodes, proxied by the opening of new plants, have a negative effect on profitability but are associated with higher sales and higher levels of employment.
    Keywords: Firm heterogeneity, investment spike, industrial dynamics, corporate performance, capital accumulation, technical change
    JEL: C14 D22 D24 D92 E22 L11 L23 L60
    Date: 2013–04
  9. By: Thierry Madiès (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Malgorzata Wasmer (Department of Economics - University of Fribourg - University of Fribourg)
    Abstract: With a market entry game inspired by Camerer and Lovallo (1999), we study the attitudes of junior and senior employees towards strategic uncertainty and competition. Seniors exhibit higher entry rates compared to juniors, especially when the market capacity is not too low or when earnings from entry depend on relative performance. This difference persists after controlling for attitudes towards non-strategic uncertainty and for beliefs on others' competitiveness and on relative ability. Seniors are more willing to compete when they predict a higher number of competitors. This contradicts the stereotype of less competitive older employees.
    Keywords: Aging; risk; ambiguity; competitiveness; confidence; experiment
    Date: 2013
  10. By: Christoph Bühren (University of Kassel); Torben C. Kundt (University of the Federal Armed Forces)
    Abstract: WWith the help of a real effort experiment, we analyze if tax evasion depends on the amount of effort invested to generate income. In three treatments, subjects were either endowed with income or had to work moderately or hard to earn it. In line with prospect theory, subjects evaded more taxes when they worked hard for their income. We find little evidence for the prediction that tax evasion in the endowed treatment is higher than in the moderate work treatment.
    Date: 2013
  11. By: Oscar Huerta Melchor
    Abstract: Strategic workforce planning is gradually becoming a key priority and core management practice for public sector employees in OECD countries. In times of limited resources, governments are required to demonstrate workforce planning capability to meet current and future challenges for service delivery and to produce efficiency gains. Since experience in workforce planning remains limited, a simple but pragmatic approach that takes into account the national context is recommended. To send consistent messages about financial and human capital resources required to achieve government‘s programmatic goals, workforce planning should be aligned with the budget process. Its success depends on the cooperation between the finance authority, the central Human Resource Management (HRM) body, and line managers in individual ministries and agencies. The implementation of workforce planning continues to present difficulties for practitioners. Therefore, management flexibility, incentives to engage managers, developing workforce planning capability, and revisions to the HRM process are critical to pave the way for a successful implementation. Monitoring and evaluating progress of the workforce plan and its contribution to the programmatic goals should be conducted systematically.
    Date: 2013–04–03
  12. By: Edgar Vogel; Alexander Ludwig; Axel Börsch-Supan
    Abstract: Projected demographic changes in industrialized and developing countries vary in extent and timing but will reduce the share of the population in working age everywhere. Conventional wisdom suggests that this will increase capital intensity with falling rates of return to capital and increasing wages. This decreases welfare for middle aged agents with assets accumulated for retirement. This paper addresses three important adjustments channels to dampen these detrimental effects of ageing: investing abroad, endogenous human capital formation and increasing the retirement age. Although non of these suggestions is new in itself, we examine their effects jointly in one coherent model. Our quantitative finding is that openness has a relatively mild effect. In contrast, endogenous human capital formation in combination with an increase in the retirement age has strong effects. Under these adjustments maximum welfare losses of demographic change for households alive in 2010 are reduced by about 3 percentage points.
    Keywords: population aging, human capital, welfare, pension reform, retirement age, open economy
    JEL: C68 E17 E25 J11 J24
    Date: 2013–02–06
  13. By: Van Sant, Alex B.; Kray, Laura J.
    Abstract: In the current research, we consider how gender composition may impact the likelihood of deception in contexts with asymmetric information where one party has the opportunity to strategically deceive another party for the opportunity to gain economically. We predict that the combined processes of social categorization and social projection should make people more likely to presume trust from same-gender others than different-gender others. Because anonymous interactions promote the tendency to construe situations instrumentally, we hypothesize that people will take advantage of presumed trust from same-gender others by being more likely to deceive them than different-gender others under conditions of anonymity. Finally,we argue that when rationalizing their deceptive behavior, liars should be more likely to attribute mistrust to same-gender others than different-gender others. We turn to the Cheap Talk Game paradigm (Gneezy, 2005) for our research setting and find support for our hypotheses across three different vignettes and a laboratory study using a behavioral measure of deception.
    Keywords: Human Resources Management and Services, Business Administration, Management and Operations, trust, gender, social projection, deception, ethical decision making
    Date: 2013–05–13

This nep-hrm issue is ©2013 by Tommaso Reggiani. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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