nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒06‒24
eighteen papers chosen by
Tommaso Reggiani
University of Cologne

  1. Moneycracy By Alessandro Fedele; Pierpaolo Giannoccolo
  2. Moonlighting Politicians: Motivation Matters! By Alessandro Fedele; Paolo Naticchioni
  3. How to combine human resource management systems and human capital portfolios to achieve superior innovation performance By Christian Rupietta; Uschi Backes-Gellner
  4. Subjective evaluation versus public information By Bester, Helmut; Münster, Johannes
  5. Management Compensation and the Economic Crisis: Longitudinal Evidence from the German Chemical Sector By Grund, Christian; Walter, Tanja
  6. Drought of Opportunities: Contemporaneous and Long Term Impacts of Rainfall Shocks on Human Capital By Manisha Shah; Bryce Millett Steinberg
  7. The Geographic Distribution of Commercial Fishing: Locational Fundamentals versus Increasing Returns By Speir, Cameron
  8. Exit options and the allocation of authority By Bester, Helmut; Krähmer, Daniel
  9. A Model of Worker Investment in Safety and Its Effects on Accidents and Wages By Guardado, José R.; Ziebarth, Nicolas R.
  10. Benefits of Education at the Intensive Margin: Childhood Academic Performance and Adult Outcomes among American Immigrants By Deniz Gevrek; Z. Eylem Gevrek; Cahit Guven
  11. Bank Bonuses and Bail-Outs By Hendrik Hakenes; Isabel Schnabel
  12. Bullying at School and Labour Market Outcomes By Drydakis, Nick
  13. Balancing the Power to Appoint Officers By Salvador Barberà; Danilo Coelho
  14. Are You Unhappy Having Minority Co-Workers? By Haile, Getinet Astatike
  15. Determinants of labor market gender inequalities in Cameroon, Senegal and Mali: the role of human capital and the fertility burden By KUEPIE Mathias; DZOSSA Anaclet Désiré; KELODJOUE Samuel
  16. Determinants of Wages, Benefits and Bonuses for Farm Employees By Artz, Georgeanne M.; Edwards, William
  17. Multitasking and Wages By Snower, Dennis J.; Goerlich, Dennis
  18. Stressful Integration By Stark, Oded

  1. By: Alessandro Fedele (Free University of Bolzano‐Bozen, School of Economics and Management.); Pierpaolo Giannoccolo (Dipartimento di Scienze Economiche, Università di Bologna)
    Abstract: How do wage and other financial benefits affect the set of candidates for political office? We answer the question by studying self-selection into politics of individuals with heterogeneous skills and heterogeneous motivations. Our predictions are in line with the efficiency wage results proposed by the extant literature when a benchmark model is considered with skills as the sole characteristic of individuals. Welfare is increasing in the politicians’ wage since the best, i.e., high-skilled, individuals are attracted to politics only if remuneration covers their high opportunity costs. Our findings are remarkably different when also motivation is taken into account. Welfare is not likely to be maximum when the politicians’ wage is maximum for individuals are attracted whose motivation is well fitted with the market rather than the public sector. Finally, we provide an overview of the labor market of politicians in some Western countries and suggest that the Italian case might be representative of our inefficiency wage mechanism, which we call moneycracy.
    Keywords: Keywords: Politicians’ remuneration, Skills, Motivation, Moneycracy
    JEL: P16 J45 J24 J32
    Date: 2013–06
  2. By: Alessandro Fedele (Free University of Bolzano‐Bozen, School of Economics and Management.); Paolo Naticchioni (University of Cassino and Southern Lazio)
    Abstract: In this paper we study optimal choices of self-selection into politics and commitment once in office of citizens with heterogeneous ability and heterogeneous motivation. Politicians can moonlight, i.e., they can work in the market sector while appointed in parliament. Our theoretical framework shows that high-ability citizens might enter politics. Yet while high-ability non-motivated (market-fit) politicians are likely to shirk, high-ability motivated (public-fit) ones are more committed to the parliamentary activity. We test our predictions by using a unique database of Italian parliamentarians for the period 1996-2006. We show that both market-fit and public-fit parliamentarians are positively selected from the Italian population. We also find that commitment of the market-fit parliamentarians in terms of voting attendance is negatively affected by income opportunities, whilst this is not the case for public-fit ones.
    Keywords: Keywords: Moonlighting Politicians, Motivation
    JEL: P16 J45 J24 J32
    Date: 2013–06
  3. By: Christian Rupietta (Department of Business Administration, University of Zurich); Uschi Backes-Gellner (Department of Business Administration, University of Zurich)
    Abstract: Firms generate new knowledge that leads to innovations by recombining existing knowledge sources. A successful recombination depends on both the availability of a knowledge stock (human capital pool) that contains innovation-relevant knowledge and the regulation of the knowledge flow through the application of human resource management practices. However, while human resource theory expects complementarities between both the human capital pool and the human resource management system it does not explicitly address their implications for knowledge exchange. Moreover, empirical approaches neglect the complexity of complementarities between the two factors. This study analyzes complementarities within and between the human capital pool and the human resource management system and shows their implications for knowledge exchange. We empirically analyze these complementarities by applying fsQCA to identify taxonomies that explain superior innovation performance. We show that firms can achieve superior innovation performance through multiple and complex pathways. Our results show four taxonomies that substantially differ in terms of human capital diversity, application of human resource management practices and the environmental dynamism of the firm.
    Keywords: Human Resource Management, Human Capital, Innovation
    Date: 2013–06
  4. By: Bester, Helmut; Münster, Johannes
    Abstract: This paper studies a principal-agent relation in which the principal's private information about the agent's effort choice is more accurate than a noisy public performance measure. For some contingencies the optimal contract has to specify ex post inefficiencies in the form of inefficient termination (firing the agent) or third-party payments (money burning). We show that money burning is the less efficient incentive device: it is used at most in addition to firing and only if the loss from termination is small. Under an optimal contract the agent's wage may depend only on the principal's report and not on the public signal. Nonetheless, public information is valuable as it facilitates truthful subjective evaluation by the principal. --
    Keywords: subjective evaluation,moral hazard,termination clauses,third-party payments
    JEL: D23 D82 D86 J41 M12
    Date: 2013
  5. By: Grund, Christian (RWTH Aachen University); Walter, Tanja (RWTH Aachen University)
    Abstract: Making use of unique balanced panel data for the German chemical sector from the years 2008 to 2011, we explore the extent to which managers' compensation was affected by the economic crisis and the extent to which it increased afterwards. Carrying out longitudinal analyses, we find that, on average, bonus payments (in contrast to fixed salaries) decrease considerably during the crisis. The economic upturn in 2011 then leads to an average increase in variable payments and total compensation to even above the pre-crisis level. Changes in bonus payments are negatively correlated over time. We find considerable differences across employees with respect to changes in bonus payments. Fixed salary changes are much more homogeneous over the period of crisis. We explore determinants of compensation changes and find that changes in compensation have a strong relationship with employees' age, firm size and hierarchical level. Our findings hint at the relevance of an incentive perspective. We also examine that certain parts of managers seem to have more power to influence their compensation than others. Inequality in managers' compensation decreased during the crisis.
    Keywords: bonus payments, economic crisis, fixed salaries, management compensation
    JEL: M52 M12 J33
    Date: 2013–05
  6. By: Manisha Shah; Bryce Millett Steinberg
    Abstract: Higher wages are generally thought to increase human capital production especially in the developing world. We show that human capital investment is procyclical in early life (in utero to age 3), but then becomes countercyclical. We argue this countercyclical effect is caused by families investing more time in schooling when outside options are worse. We show that children and mothers report a lower likelihood of work in drought years, and children are more likely to attend school. In addition, we find long term impacts of these shocks: adults who experienced more rainfall during school years have lower overall total years of schooling and lower wages. These results suggest that the opportunity cost of schooling, even for fairly young children, is an important factor in determining overall human capital investment.
    JEL: I25 J1 O12
    Date: 2013–06
  7. By: Speir, Cameron
    Keywords: Industrial Organization, Labor and Human Capital,
    Date: 2013
  8. By: Bester, Helmut; Krähmer, Daniel
    Abstract: We analyze the optimal allocation of authority in an organization whose members have conflicting preferences. One party has decision-relevant private information, and the party who obtains authority decides in a self-interested way. As a novel element in the literature on decision rights, we consider exit option contracts: the party without decision rights is entitled to prematurely terminate the relation after the other party's choice. We show that under such a contract it is always optimal to assign authority to the informed and not to the uninformed party, irrespective of the parties' conflict of interest. Indeed, the first-best efficient solution can be obtained by such a contract. --
    Keywords: authority,decision rights,exit options,incomplete contracts,asymmetric information
    JEL: D23 D82 D86
    Date: 2013
  9. By: Guardado, José R. (American Medical Association); Ziebarth, Nicolas R. (Cornell University)
    Abstract: In this paper, we develop a theoretical model of worker investment in safety. Standard theory assumes that injury risk is exogenous. It predicts that riskier jobs are associated with higher wages. In contrast, in our model, workers make individual safety investments that reduce the risk of injury. This results in a negative association between individual injury risk and wages. We test the model's predictions using obesity as a proxy for worker disinvestments in human capital and safety. In line with our model predictions, we find a significant positive compensating wage differential (CWD) for nonfatal risk at the occupational level. At the same time, however, there exists an underlying significant negative association between individual accident risk and wages, but only in high risk occupations. The latter relationship may downward bias or mask CWD estimates.
    Keywords: worker investment, safety, nonfatal risk, compensating wage differential, obesity
    JEL: I10 I12 J24 J31 J62 J71
    Date: 2013–05
  10. By: Deniz Gevrek (Texas A&M University, Corpus Christi, 6300 Ocean Drive, Corpus Christi, TX 78412 and IZA, Bonn, Germany); Z. Eylem Gevrek (Department of Economics, University of Konstanz, Germany); Cahit Guven (Deakin University, Victoria 125, Australia)
    Abstract: Using the Children of the Immigrants Longitudinal Study from the United States, this paper examines the association between schooling at the intensive margin and adult outcomes among first- and second-generation American immigrants. Schooling at the intensive margin is measured by reading and math scores in middle school and by GPA scores in both middle and high school. We find that measures of academic performance predict pecuniary and nonpecuniary adult outcomes. We also find that academic performance in high school relative to middle school is important in explaining adult socioeconomic outcomes. Immigrants with higher GPAs in high school compared to middle school have more schooling, are in better health, are less likely to commit crime, and have higher expectations regarding future job prestige and schooling. On the other hand, a decline in GPAs is associated with lower satisfaction with income and occupation. Moreover, our results indicate that infant mortality rate, which is used as a proxy for unfavorable health conditions in the country of birth, has a negative impact on academic performance during childhood and on personal earnings and income satisfaction during adulthood.
    Keywords: Economics of Education, Human Capital, School Performance, Immigrants
    JEL: I21 I25 J15 J24
    Date: 2013–06–08
  11. By: Hendrik Hakenes (University of Bonn, Finance Department); Isabel Schnabel (Gutenberg School of Management and Economics, Johannes Gutenberg University Mainz)
    Abstract: This paper shows that bonus contracts may arise endogenously as a response to agency problems within banks, and analyzes how compensation schemes change in reaction to anticipated bail-outs. If there is a risk-shifting problem, bail-out expectations lead to steeper bonus schemes and even more risk-taking. If there is an effort problem, the compensation scheme becomes flatter and effort decreases. If both types of agency problems are present, a sufficiently large increase in bailout perceptions makes it optimal for a welfare-maximizing regulator to impose caps on bank bonuses. In contrast, raising managers’ liability can be counterproductive.
    Keywords: bonus payments, bank bail-outs, bank management compensation, risk-shifting, underinvestment, limited and unlimited liability
    JEL: J33 G21 G28 M52
    Date: 2013–02
  12. By: Drydakis, Nick (Anglia Ruskin University)
    Abstract: This study examines the long-term correlates of bullying in school with aspects of functioning in adult employment outcomes. Bullying is considered and evaluated as a proxy for unmeasured productivity, and a framework is provided that outlines why bullying might affect employment outcomes through differences in skills and traits. Using Bivariate and Heckit models we employ a variety of specifications and find several interesting patterns. The regression outcomes suggest that labour force participation, employment rate and hourly wages are negatively affected by bullying. In addition, men, homosexuals, immigrants, unmarried people, those having higher negative mental health symptoms, and those having lower human capital are more negatively affected by bullying in terms of labour force participation, employment probability, and hourly wages. Moreover, Oaxaca-Blinder decompositions suggest that labour force participation gaps, employment gaps and hourly wage gaps between minority and majority groups, especially for gay men and the disabled, can be explained by bullying incidents. It seems likely that having been a victim of bullying also has economic implications later in life due to withdrawal from the labour market and lower wages.
    Keywords: bullying, personality traits and processes, human capital, labour force, employment, wages
    JEL: E24 J21 J24
    Date: 2013–05
  13. By: Salvador Barberà; Danilo Coelho
    Abstract: Rules of k names are frequently used methods to appoint individuals to office. They are two-stage procedures where a first set of agents, the proposers, select k individuals from an initial set of candidates, and then another agent, the chooser, appoints one among those k in the list. In practice, the list of k names is often arrived at by letting each of the proposers screen the proposed candidates by voting for v of them and then choose those k with the highest support. We then speak of v-rules of k names. Our main purpose in this paper is to study how different choices of the parameters v and k affect the balance of power between the proposers and the choosers. From a positive point of view, we analyze a strategic game where the proposers interact to determine what list of candidates to submit. From a normative point of view, we study the performance of different rules in expected terms, under different informational assumptions. The choice of v and k is then analyzed from the perspectives of efficiency, fairness and compromise.
    Keywords: voting rules, constitutional design, Strong Nash equilibrium, rule of k names
    JEL: D02 D71 D72
    Date: 2013–05
  14. By: Haile, Getinet Astatike (University of Nottingham)
    Abstract: This paper attempts to establish empirically whether natives' job satisfaction is adversely affected by having minority co-worker(s). The paper uses nationally representative linked employer-employee data and eight different facets of job satisfaction. Measuring minority co-worker status at the workplace- and occupation-level and employing alternative econometric estimators; the paper finds that on average natives' experience a reduction in job satisfaction due to having minority co-worker(s). The effect found is larger if the co-worker-ship is at the occupation-level.
    Keywords: discrimination, job-related well-being, linked employer-employee data, Britain
    JEL: J7 J15 J82 I31
    Date: 2013–05
  15. By: KUEPIE Mathias; DZOSSA Anaclet Désiré; KELODJOUE Samuel
    Abstract: The purpose of this study is to measure the impact of human capital and the fertility burden on labor market inequalities between men and women, in particular as regards access to the most highly paid jobs. The study covers Cameroon, Mali and Senegal, three countries in sub-Saharan Africa with similar socioeconomic characteristics. The findings show that, even with the same level of education as men, women still stand less of a chance of getting into the top job segment, because education is less efficient for them. This result provides evidence of gender discrimination in all three countries. A fertility burden in terms of a large family is another obstacle to female access to high quality jobs. It has a direct negative impact in the two Sahelian countries (Mali and Senegal) and an indirect negative impact via its interaction with education in Cameroon and Senegal. In these two countries, the more children a woman has, the lower her marginal return to education. These findings combine to show that a woman?s labor market situation improves in all three countries when fertility declines, either directly through greater access to top jobs or indirectly via better human capital efficiency.
    Keywords: Female labor; Gender inequality; Labor market; Education return; Fertility
    JEL: J13 J22 J24
    Date: 2013–06
  16. By: Artz, Georgeanne M.; Edwards, William
    Keywords: Farm Management,
    Date: 2013
  17. By: Snower, Dennis J. (Kiel Institute for the World Economy); Goerlich, Dennis (Kiel Institute for the World Economy)
    Abstract: This paper sheds light on how changes in the organization of work can help to understand increasing wage inequality. We present a theoretical model in which workers with a wider span of competence (higher level of multitasking) earn a wage premium. Since abilities and opportunities to expand the span of competence are distributed unequally among workers across and within education groups, our theory helps to explain (1) rising wage inequality between groups, and (2) rising wage inequality within groups. Under certain assumptions, it also helps to explain (3) the polarization of the income distribution. Using a rich German data set covering a 20-year period from 1986 to 2006, we provide empirical support for our model.
    Keywords: wage inequality, multitasking, tasks, organizational change
    JEL: J31 J24 L23
    Date: 2013–05
  18. By: Stark, Oded
    Abstract: This paper considers the integration of economies as a merger of populations. The premise is that the merger of groups of people alters their social landscape and their comparators. The paper identifies the effect of the merger on aggregate distress. A merger is shown to increase aggregate distress, measured as total relative deprivation: the social distress of a merged population is greater than the sum of the social distress of the constituent populations when apart. Physiological evidence from neighboring disciplines points to an increase in societal stress upon merger.
    Keywords: Merger of populations, Revision of social space, Aggregate relative deprivation, Societal distress, Community/Rural/Urban Development, Institutional and Behavioral Economics, Labor and Human Capital, Productivity Analysis, D04, D63, F55, H53, P51,
    Date: 2013–05

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