nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒07‒15
twenty papers chosen by
Tommaso Reggiani
University of Cologne

  1. Explaining entrepreneurial performance of solo self-employed from a motivational perspective By André van Stel; Werner Liebregts; Nardo de Vries
  2. Social networks, employee selection and labor market outcomes By Hensvik, Lena; Nordström Skans, Oskar
  3. Relative Performance Payment in Cooperatives – A Model-Theoretical Analysis By Zieseniss, Roland; Kuehl, Rainer
  4. Gender Differences and Dynamics in Competition: The Role of Luck By David Gill; Victoria Prowse
  5. Workers' Responses to Incentives: The Case of Pending MLB Free Agents By Joshua Congdon-Hohman; Jonathan A. Lanning
  6. How The Simplification of Work Can Degrade Safety: A Gas Company Case Study By Hortense Blazsin; Franck Guarnieri; Christophe Martin
  7. The Consequences of Using One Assessment System To Pursue Two Objectives By Derek Neal
  8. Reciprocal preferences and the unraveling of gift-exchange By Riedl A.M.; Dariel A.
  9. Experts’ Awards and Economic Success: Evidence from an Italian Literary Prize By Michela Ponzo; Vincenzo Scoppa
  10. Age-Specific Education Inequality, Education Mobility and Income Growth By Jesus Crespo Cuaresma; Samir K.C.; Petra Sauer
  11. Team Heterogeneity in Startups and its Development over Time By Ulrich Kaiser; Bettina Müller
  12. Understanding Social Interactions: Evidence from the Classroom By Giacomo De Giorgi; Michele Pellizzari
  13. Moneycracy By A. Fedele; P. Giannoccolo
  14. The impact of military work experience on later hiring chances in the civilian labour market: Evidence from a field experiment By Baert, Stijn; Balcaen, Pieter
  15. How do worker cooperatives stabilize employment? The role of profit reinvestment into locked assets By Cecilia Navarra
  16. The effect of identifiability on the relationship between risk attitudes and other-regarding concerns By Anastasios Koukoumelis; M. Vittoria Levati; Matteo Ploner
  17. A framework for analyzing performance in higher education By Lola C. Duque
  18. The dynamics of organizational structures and performances under diverging distributions of knowledge and different power structures By Giovanni Dosi; Luigi Marengo
  19. Organizations, diffused pivotality and immoral outcomes By Falk, Armin; Szech, Nora
  20. The Legacy of Conflict – Regional Deprivation and School Performance in Northern Ireland By Neil T.N. Ferguson; Maren M. Michaelsen

  1. By: André van Stel; Werner Liebregts; Nardo de Vries
    Abstract: This paper investigates whether start-up motivation (opportunity versus necessity) influences entrepreneurial performance of an important subset of entrepreneurs, viz. the solo self-employed. We also explore to what extent human capital measures mediate this relation. We use a unique individual-level panel data set of solo self-employed in the Netherlands for three consecutive years (2009-2011) and construct three separate measures to identify necessitydriven solo self-employment. Our main finding confirms that necessity-driven solo self-employed perform worse than opportunity-driven solo self-employed. Furthermore, start-up motivation seems to have an isolated effect on entrepreneurial performance, considering that we also find that formal education and practical learning hardly mediate the relation. Our results imply that it is important to distinguish between different motivations within the population of solo self-employed in order to understand their entrepreneurial performance.
    Date: 2013–05–30
  2. By: Hensvik, Lena (IFAU - Institute for Evaluation of Labour Market and Education Policy); Nordström Skans, Oskar (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: The paper studies how social job finding networks affect firms' selection of employees and the setting of entry wages. Our point of departure is the Montgomery (1991) model of employee referrals which suggests that it is optimal for firms to hire new workers through referrals from their most productive existing employees, as these employees are more likely to know others with high unobserved productivity. Empirically, we identify the networks through coworker links within a rich matched employer-employee data set with cognitive and non-cognitive test scores serving as predetermined indicators of individual productivity. The results corroborate the Montgomery model's key predictions regarding employee selection patterns and entry wages into skill intensive jobs. Incumbent workers of high aptitude are more likely to be linked to entering workers. Firms also acquire entrants with higher ability scores but lower schooling when hiring linked workers supporting the notion that firms use referrals of productive employees in order to attract workers with better qualities in dimensions that would be difficult to observe at the formal market. Furthermore, the abilities of incumbent workers are reflected in the starting wages of linked entrants, suggesting that firms use the ability-density of social networks when setting entry wages. Overall the results suggest that firms use social networks as a signal of worker productivity, and that workers therefore benefit from the quality of their social ties.
    Keywords: Referrals; wage inequality; employer learning; cognitive skills
    JEL: J24 J31 J64 M51 Z13
    Date: 2013–06–26
  3. By: Zieseniss, Roland; Kuehl, Rainer
    Abstract: Governing the cooperatives’ management by payment systems turns out to be a non-trivial problem due to the specific characteristics of the legal structure. Evaluating the management’s performance is complicated by the business relations between members and their cooperative. A relative performance payment can make a significant contribution to the reduction of target inconsistencies between the members and the management of cooperatives. It is based on the idea that for evaluating the performance of a manager not only the company's results of its "own" company are used, but also the competitors’ or industry’s results. There are three advantages of a relative performance evaluation: • The inclusion of the results of other companies allows reducing systematic arising risks of the compensation scheme for the CEO. • The compensation scheme can include the cooperative’s profit for the evaluation of the market success and a comparison of the purchase prices for the members´ products in order to measure the member value. This will lead the CEO’s decisions and labor effort toward members´ aims. • The members can use the compensation scheme as a strategic variable to reduce competition intensity between the cooperatives. The paper considers the incentive characteristics of linear contracts based on relative performance evaluation for CEOs under the specific requirements of cooperatives. The analysis includes a comparison of different compensation schemes and their utility for cooperatives in several market scenarios.
    Keywords: Cooperative Governance, compensation schemes, relative performance payment, Cournot model, Demand and Price Analysis, Productivity Analysis, Research Methods/ Statistical Methods,
    Date: 2013–02
  4. By: David Gill (University of Oxford); Victoria Prowse (Cornell University)
    Abstract: In a real effort experiment with repeated competition we find striking differences in how the work effort of men and women responds to previous wins and losses. For women losing per se is detrimental to productivity, but for men a loss impacts negatively on productivity only when the prize at stake is big enough. Responses to luck are more persistent and explain more of the variation in behavior for women, and account for about half of the gender performance gap in our experiment. Our findings shed new light on why women may be less inclined to pursue competition-intensive careers.
    Keywords: Labor market outcomes; Gender gap; Experiment; Real effort; Career development; Competition; Luck; Productivity; Relative performance evaluation; Tournament; Wining; Losing
    JEL: C91 D03 J16
    Date: 2013–07
  5. By: Joshua Congdon-Hohman (Department of Economics, College of the Holy Cross); Jonathan A. Lanning (Department of Economics, Bryn Mawr)
    Abstract: This study examines ways in which workers respond to implicit incentives. Specifically, we examine the extent to which workers shift their effort to activities that are measured and which have been previously rewarded in the labor market. To examine this question, we examine the changes in the performance measures of professional baseball players in the season prior to the opportunity to freely negotiate their contract (free agency). We will examine different eras in baseball to examine if we can identify changes in behavior in this pivotal year based on changes to the current premium outputs for each time period.
    Keywords: Agency theory, strategic performance, opportunistic behavior, baseball
    JEL: J24 J31 L83
    Date: 2013–07
  6. By: Hortense Blazsin (CRC - Centre de recherche sur les Risques et les Crises - MINES ParisTech - École nationale supérieure des mines de Paris); Franck Guarnieri (CRC - Centre de recherche sur les Risques et les Crises - MINES ParisTech - École nationale supérieure des mines de Paris); Christophe Martin (CRC - Centre de recherche sur les Risques et les Crises - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: Work is focused on a gas company that wishes to develop a better understanding of its safety culture and identify potential enhancement opportunities. The hypothesis that emerged from an exploratory phase of work suggests that the corporate restructuring initiated four years ago, which has divided the company into distinct business units, has reduced organizational reliability. This issue raises a question faced by most industrial organizations, namely the trade-off between productivity and safety. On the one hand, streamlining activities offers an opportunity to save money, particularly through economies of scale and employee specialization. On the other hand maintaining flexibility generates costs, but provides a defence against silo effects, which are detrimental to safety. This paper describes how the company was restructured and the effects on risk management. The aim is to better understand the effects of the rationalisation on organizational reliability and performance, in order to identify potential solutions that may limit any counter-productive impacts.
    Keywords: Resilience; Safety Culture; Division of Activity; Organization; Field operators; Managers; Trade-Offs
    Date: 2013–06–25
  7. By: Derek Neal
    Abstract: Education officials often use one assessment system both to create measures of student achievement and to create performance metrics for educators. However, modern standardized testing systems are not designed to produce performance metrics for teachers or principals. They are designed to produce reliable measures of individual student achievement in a low-stakes testing environment. The design features that promote reliable measurement provide opportunities for teachers to profitably coach students on test taking skills, and educators typically exploit these opportunities whenever modern assessments are used in high-stakes settings as vehicles for gathering information about their performance. Because these coaching responses often contaminate measures of both student achievement and educator performance, it is likely possible to acquire more accurate measures of both student achievement and education performance by developing separate assessment systems that are designed specifically for each measurement task.
    JEL: I20 I21
    Date: 2013–07
  8. By: Riedl A.M.; Dariel A. (GSBE)
    Abstract: We elicit reciprocal preferences in a firm-worker gift-exchange setting and relate them to actual behavior in a repeated gift-exchange game. We find that only a small minority of 10 percent of workers is materially selfish whereas 90 percent exhibit reciprocal preferences. However, the intensity of reciprocal preferences is weak in the sense that firms maximize profits by not relying on gift-exchange but by offering the lowest possible wage. Workers behavior in the repeated gift-exchange game is predicted by their elicited preferences, but the correlation between preferences and behavior is imperfect. Together with profit maximizing behavior of firms these observations can explain the observed unraveling of gift-exchange over time in our experiment and some recent field experiments.
    Keywords: Noncooperative Games; Design of Experiments: Laboratory, Group Behavior; Labor-Management Relations, Trade Unions, and Collective Bargaining: Other;
    JEL: C72 C92 J59
    Date: 2013
  9. By: Michela Ponzo (University of Naples and CSEF); Vincenzo Scoppa (University of Calabria and IZA)
    Abstract: Product quality is often unobservable ex-ante and consumers rely on experts’ judgments, sometimes coming under the form of ratings or awards. Do awards affect consumers’ choices or they are conferred to the most popular products? To disentangle this issue, we use data of the most important Italian Literary Prize, the “Strega Prize”, undertaking two different estimation strategies to evaluate the impact on book sales of being awarded the Prize. First, we adopt a Regression Discontinuity Design using as dependent variable a measure of book sales and as forcing variable (proxying for intrinsic book quality) the jury votes received by each nominated book in the competition. We find a very strong impact of the Strega Prize on sales. Second, using weekly data on appearances in bestseller lists, we estimate a difference-in-differences model, comparing sales performance of treated and control books before the award is conferred with their respective performance afterwards. The results confirm a huge influence of the Prize on book sales and show that most of the impact occurs in the weeks following the announcement.
    Keywords: Cultural Economics; Awards; Literary Prize; Book Sales; Product Quality; Regression Discontinuity Design; Difference-in-Differences model.
    JEL: Z10 Z11 L15 L80 M30 D12
    Date: 2013–06–27
  10. By: Jesus Crespo Cuaresma; Samir K.C.; Petra Sauer
    Abstract: We construct a new dataset of inequality in educational attainment by age and sex at the global level. The comparison of education inequality measures across age groups allows us to assess the effect of inter-generational education attainment trends on economic growth. Our results indicate that countries which are able to reduce the inequality of educational attainment of young cohorts over time tend to have higher growth rates of income per capita. This effect is additional to that implied by the accumulation of human capital and implies that policies aiming at providing broad-based access to schooling have returns in terms of economic growth that go beyond those achieved by increasing average educational attainment.
    Keywords: human capital, education inequality, age structure, economic growth
    JEL: I24 I25 O50
    Date: 2013–06
  11. By: Ulrich Kaiser (Department of Business Administration, University of Zurich); Bettina Müller (Centre for European Economic Research, Dept. of Industrial Economics and International Management, Mannheim)
    Abstract: We investigate the workforce heterogeneity of startups with respect to ed- ucation, age and wages. Our explorative study uses data on the population of 1,614 Danish rms founded in 1998. We track these rms until 2001 which enables us to analyze changes in workforce composition over time. Such a dynamic analysis constitutes a hitherto neglected area of entrepreneurship re- search. To assess relative workforce heterogeneity, we construct a simulated benchmark to which we compare observed workforce heterogeneity. We nd that the initial workforce is relatively homogeneous compared to our bench- mark. Our result holds both for non-knowledge-based and, to a lesser extent, knowledge-based startups. This seems surprising since a vast management literature advocates heterogeneous teams. The diculties associated with workforce heterogeneity (like aective con ict or coordination cost) as well as \homophily" (peoples inclination to bound with others with similar char- acteristics) hence appear to generally overweigh the benets of heterogeneity (like greater variety in perspectives or more creativity). We also document that workforces become more heterogeneous over time | startups add work- ers with skills dierent from the workforce at startup. The initial supposedly \poor" mix of workforce characteristics is hence adjusted as the startup ma- tures. This increase in workforce heterogeneity is, however, smaller compared to our benchmark but substantially larger than is team additions had the same characteristics as the initial team members
    Keywords: labor Entrepreneurship, Startups, Skill Heterogeneity, Team Dynam- ics
    JEL: C10 L26 M13
    Date: 2013–06
  12. By: Giacomo De Giorgi; Michele Pellizzari
    Abstract: Little is known about the economic mechanisms leading to the high level of clustering in behavior commonly observed in the data. We present a model where agents can interact according to three distinct mechanisms, and we derive testable implications which allow us to distinguish between the proposed mechanisms. In our application we study students’ performance and we find that a mutual insurance mechanism is consistent with the data. Such a result bears important policy implications for all those situations in which social interactions are important, from teamwork to class formation in education and co-authorship in academic research.
    JEL: I21 J0
    Date: 2013–07
  13. By: A. Fedele; P. Giannoccolo
    Abstract: How do wage and other financial benefits affect the set of candidates for political office? In this theoretical paper, 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 with skills as the sole relevant characteristic of individuals is considered. Welfare is increasing in the politicians'wage since the best, i.e., high-skilled, individuals are attracted to politics only if their remuneration covers their high opportunity costs. Our findings are remarkably different when motivation is also taken into account. Welfare is not likely to be maximized when the politicians'wage is relatively high, for high-skilled individuals with market-oriented rather than public-spirited motivation are attracted. Finally, we provide an overview of the labor market of politicians in Europe and suggest that the Italian Parliament might be representative of our inefficiency wage mechanism, which we call moneycracy.
    JEL: P16 J45 J24 J32
    Date: 2013–07
  14. By: Baert, Stijn; Balcaen, Pieter
    Abstract: This study directly assesses the impact of military work experience compared with civilian work experience in similar jobs on the subsequent chances of being hired in the civilian labour market. It does so through a field experiment in the Belgian labour market. A statistical examination of our experimental dataset shows that in general we cannot reject that employers are indifferent to whether job candidates gained their experience in a civilian or a military environment. --
    Keywords: field experiments,hiring discrimination,economics of defence
    JEL: C93 J45 J24 J71
    Date: 2013
  15. By: Cecilia Navarra (Center for Research in the Economics of Development, University of Namur)
    Abstract: A frequent characteristic of worker cooperatives is the tendency to reinvest a large share of profits into asset locks: a common fund, indivisible and not appropriable by members, neither upon quitting, nor at the end of the firms life. To explain this behaviour, I introduce the hypothesis that asset locks play a significant role in employment stabilization. This can be obtained in two ways: by letting wages fluctuate, or by accumulating reinvested profits into an income stabilizing fund that allows to face downturns without firing and without reducing wages. In this second case, asset locks play a wage smoothing role. I provide evidence for this function by means of original data at the firm level and by first-hand collected survey data at the individual level on risk perception in a sample of Italian cooperatives.
    Keywords: worker cooperatives, asset locks, employment stability, wage smoothing
    JEL: J54 P13
    Date: 2013–06
  16. By: Anastasios Koukoumelis (Max Planck Institute of Economics, Strategic Interaction Group, Jena); M. Vittoria Levati (Max Planck Institute of Economics, Strategic Interaction Group, Jena, and DSE, University of Verona); Matteo Ploner (Department of Economics, University of Trento)
    Abstract: Previous studies have shown that other-regarding concerns are weakened under risky situations. Daily experience also suggests that people care more about an identifiable than about an unidentifiable third person. We report on an experiment designed to explore whether rendering the other identifiable-via a speechless video and the revelation of personal information-affects the relationship between other-regarding concerns and risk preferences when there is risk to one's own and/or the other's payoff. We find that the acquisition of information about the other has no effect on behavior. Regardless of the treatment, most of the participants are other-regarding with respect to expected payoff but self-oriented with respect to risk allocation.
    Keywords: Risk attitudes, Other-regarding concerns, Identifiability
    JEL: C90 D63 D81
    Date: 2013–07–01
  17. By: Lola C. Duque
    Abstract: Drawing on Tinto’s dropout intentions model (1975), Bean’s socialization model (1985), Astin’s involvement theory (1999), and the service marketing literature, this research presents a conceptual framework for analyzing students’ satisfaction, perceived learning outcomes, and dropout intentions. This framework allows for a better understanding of how students assess the university experience and how these perceptions affect future intentions. This article presents four studies testing fragments of the framework using data sets come from three countries and various undergraduate programs (business, economics, geography, and nursing). The models are tested using structural equation modeling with data collected using a questionnaire adapted to the specific contexts. The models have the ability to explain the studies’ dependent variables and offer practical utility for decision making. Applicability of the conceptual framework is evaluated in various contexts and with different student populations. One important finding is that student co-creation can be as important as perceived service quality in explaining students’ cognitive learning outcomes, which in turn explain a high percentage of satisfaction and affective learning outcomes. The studies also shed light on the roles of variables such as emotional exhaustion and dropout intentions
    Keywords: Subjective measures, Satisfaction, Perceived quality, Performance, Higher education
    Date: 2013–07
  18. By: Giovanni Dosi; Luigi Marengo
    Abstract: In this work we analyze the characteristics and dynamics of organi- zations wherein members diverge in terms of capabilities and visions they hold, and interests which they pursue. How does society put together such distributed and possibly coflicting knowledge? The question is "Hayekian" in its emphasis on the distributed features of the latter. However, our analytical point of departure is quite "anti- Hayekian" in that it focuses on how organizations aggregate and put to use such knowledge by means of di®erent combinations among power of allocation of decisions and exercise of authority. Together, organizational power shapes the very preferences of organizational members. More specifically, we study the efficiency of different balances between the three foregoing mechanisms. In all that, organization for sure "aggregate" and make compatible different pieces of distributed knowledge, but the causation arrow goes also the other way round: organizations shape the characteristics and distribution of knowledge itself, and of the micro "visions" and judgements.
    Keywords: authority, power, distributed knowledge
    Date: 2013–07–08
  19. By: Falk, Armin; Szech, Nora
    Abstract: This paper studies how organizational design affects moral outcomes. Subjects face the decision to either kill mice for money or to save mice. We compare a Baseline treatment where subjects are fully pivotal to a Diffused-Pivotality treatment where subjects simultaneously choose in groups of eight. In the latter condition eight mice are killed if at least one subject opts for killing. The fraction of subjects deciding to kill is higher when pivotality is diffused. The likelihood of killing is monotone in subjective perceptions of pivotality. On an aggregate level many more mice are killed in Diffused-Pivotality than Baseline. -- Diese Arbeit untersucht den Einfluss von institutionellem Design auf moralische Entscheidungen. Die Teilnehmer entscheiden, ob sie dem Tod von Mäusen für Geld zustimmen möchten, oder ob sie die Mäuse retten möchten. Wir vergleichen eine Baseline-Versuchsanordnung, in der die Teilnehmer individuell über das Leben einer Maus entscheiden und somit sicher pivotal sind, mit einer Diffused-Pivotality-Anordnung, bei der simultan in Gruppen zu jeweils acht Mitgliedern entschieden wird. In letzterer Anordnung werden acht Mäuse getötet, wenn sich wenigstens ein Mitglied für die Tötung ausspricht. Die Anzahl der Personen, die der Tötung zustimmen, ist höher, wenn die Pivotalität gestreut ist. Die Wahrscheinlichkeit zu töten steigt in der Pivotalitätswahrnehmung der Teilnehmer. Auf aggregierter Ebene werden bei Diffused-Pivotality erheblich mehr Mäuse getötet als in der Baseline-Anordnung.
    Keywords: Diffused Pivotality,Moral Decision Making,Committees,Group Decisions,Moral Transgression
    JEL: C91 D01 D03 D23 D63
    Date: 2013
  20. By: Neil T.N. Ferguson; Maren M. Michaelsen
    Abstract: The relationship between deprivation and educational outcomes has been the subject of a long-running and deep debate in the economic literature. Recent discussions have focused on causality, with experimental and quasi-experimental approaches taken, yet, predominantly, the literature continues to proxy deprivation with measures of wealth. This paper explores a much wider measure and identifi es a causal relationship between regional deprivation and school performance in Northern Ireland. Combining panel data on Key Stage II results from each of Northern Ireland's primary schools with the 2005 Northern Ireland Multiple Deprivation Measure, we show the net negative impact of this wider measure, whilst an extension explores the impacts of each single domain. Using an error-component two-stage least squares model, we account for school and neighbourhood selection and the potential endogeneity of our deprivation measure, showing spatial variation in historical violence, which occurred during The Troubles, to be a valid instrument for deprivation. Our results confirm the negative impact of deprivation frequently found in the literature but also that, when the impacts of other deprivation domains are accounted for, education and crime deprivation, and not financial deprivation, play a significant role in determining outcomes. This confirms the limitations of using wealth as a proxy for neighbourhood deprivation, whilst suggesting that policies focusing only on income redistribution will be unsuccessful in improving education outcomes of those exposed to deprivation.
    Keywords: Violent conflict; regional deprivation; human capital accumulation; Northern Ireland
    JEL: I24 R23
    Date: 2013–06

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