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on Human Capital and Human Resource Management |
| By: | Carpenter, Jeffrey P. (Middlebury College); Gong, Erick (Middlebury College) |
| Abstract: | Economic theory predicts that agents will work harder if they believe in the "mission" of the organization. Well-identified estimates of exactly how much harder they will work have been elusive, however, because agents select into jobs. We conduct a real effort experiment with participants who work directly for organizations with clear missions. Weeks before the experiment, we survey potential participants for their organizational preferences. At the experiment, we randomly assign workers to organizations, creating either mission matches or mismatches. We overlay performance incentives to test whether they can make up for the motivational deficit caused by a mismatch. Our estimates suggest that matched workers produce 72% more than mismatched workers and that performance pay can increase output by 35% compared to workers who only receive a base wage. Considering matches and mismatches separately, we find that performance pay has only a modest effect on matched workers (a 13% increase) while it has a large effect (a 86% increase) on mismatches, an effect that erodes much of the performance gap caused by the poor match. Our results have broad implications both for those organizations already with well-defined missions (i.e., compensation and screening policies) as well as for those organizations strategizing about strengthening or clarifying their missions. |
| Keywords: | principal-agent, mission, incentive, labor supply, experiment |
| JEL: | C91 J22 J33 M52 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7602&r=hrm |
| By: | Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Tobias Stucki (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Florian Seliger (KOF Swiss Economic Institute, ETH Zurich, Switzerland) |
| Abstract: | Human resource management (HRM) practices are generally expected to stimulate a firm’s innovation performance. However, which of these practices do really pay off? Based on a unique dataset that includes detailed information for both a firm’s innovation activities and different types of HRM practices we find that primarily new workplace organization practices seem to enhance a firm’s innovation activities. Flexible practices of working time management and incentive payment schemes show only small effects on both innovation propensity and innovation success. Further training does only affect innovation success, but not innovation propensity. Overall, we find a stronger linkage between innovative HRM practices and innovation propensity than with innovation success. |
| Keywords: | human resource management, workplace organization, innovation performance |
| JEL: | O31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:13-341&r=hrm |
| By: | Berg, Erlend; Ghatak, Maitreesh; Manjula, R; Rajasekhar, D; Roy, Sanchari |
| Abstract: | This paper studies the interaction of incentive pay and social distance in the dissemination of information. We analyse theoretically as well as empirically the effect of incentive pay when agents have pro-social objectives, but also preferences over dealing with one social group relative to another. In a randomised field experiment undertaken across 151 villages in South India, local agents were hired to spread information about a public health insurance programme. Relative to flat pay, incentive pay improves knowledge transmission to households that are socially distant from the agent, but not to households similar to the agent. |
| Keywords: | incentive pay; information constraints; knowledge transmission; public services; social proximity |
| JEL: | C93 D83 I38 M52 O15 Z13 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9477&r=hrm |
| By: | George J. Borjas; Kirk B. Doran |
| Abstract: | Knowledge generation is key to economic growth, and scientific prizes are designed to encourage it. But how does winning a prestigious prize affect future output? We compare the productivity of Fields medalists (winners of the top mathematics prize) to that of similarly brilliant contenders. The two groups have similar publication rates until the award year, after which the winners’ productivity declines. The medalists begin to “play the field,” studying unfamiliar topics at the expense of writing papers. It appears that tournaments can have large post-prize effects on the effort allocation of knowledge producers. |
| JEL: | J22 J24 J33 O31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19445&r=hrm |
| By: | Joan Llull |
| Abstract: | This paper analyzes the effect of immigration on wages taking into account human capital and labor supply adjustments. Using U.S. micro-data for 1967-2007, I estimate a labor market equilibrium model that includes endogenous decisions on education, participation, and occupation, and allows for skill-biased technical change. Results suggest important labor market adjustments that mitigate the effect of immigration on wages. These adjustments include career switches, labor market detachment and changes in schooling decisions, and are heterogeneous across the workforce. The adjustments generate substantial self-selection biases at the lower tail of the wage distribution that are corrected by the estimated model. |
| Keywords: | immigration, wages, human capital, labor supply, dynamic discrete choice, labor market equilibrium |
| JEL: | J2 J31 J61 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:711&r=hrm |
| By: | Görlich, Dennis; Snower, Dennis J. |
| 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: | multitasking; organizational change; tasks; wage inequality |
| JEL: | J24 J31 L23 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9455&r=hrm |
| By: | Kohei Kawamura (University of Edinburgh) and Jozsef Sakovics (University of Edinburgh) |
| Abstract: | We analyse a labour matching model with wage posting, where ?re?flecting institutional constraints - ?fi?rms cannot differentiate their wage offers within certain subsets of workers. Inter alia, we fi?nd that the presence of impersonal wage offers leads to wage compression, which propagates to the wages for high productivity workers who receive personalised offers. |
| Date: | 2013–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:edn:esedps:221&r=hrm |
| By: | Bartolucci, Cristian (Collegio Carlo Alberto); Devicienti, Francesco (University of Turin) |
| Abstract: | We propose a simple test that uses information on workers' mobility, wages and firms' profits to identify the sign and strength of assortative matching. The basic intuition underlying our empirical strategy is that, in the presence of positive (negative) assortative matching, good workers are more (less) likely to move to better firms than bad workers. Assuming that agents' payoffs are increasing in their own types, our test exploits within-firm variation on wages to rank workers by their types and firm profits to rank firms. We use a panel data set that combines social security earnings records for workers in the Veneto region of Italy with detailed balance-sheet data for firms. We find robust evidence that positive assortative matching is pervasive in the labor market. This result is in contrast with what we find from correlating the worker and firm fixed effects in standard Mincerian wage equations. |
| Keywords: | assortative matching, worker mobility, wages, profits, matched employer-employee data |
| JEL: | J6 J31 L2 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7601&r=hrm |
| By: | Eric V. Edmonds; Maheshwor Shrestha |
| Abstract: | Can efforts to promote education deter child labor? We report on the findings of a field experiment where a conditional transfer incentivized the schooling of children associated with carpet factories in Nepal. We find that schooling increases and child involvement in carpet weaving decreases when schooling is incentivized. As a simple static labor supply model would predict, we observe that treated children resort to their counterfactual level of school attendance and carpet weaving when schooling is no longer incentivized. From a child labor policy perspective, our findings imply that “You get what you pay for” when schooling incentives are used to combat hazardous child labor. |
| JEL: | J22 J88 O15 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19279&r=hrm |
| By: | Agenor, Pierre-Richard; Dinh, Hinh T. |
| Abstract: | Links between social capital, human capital, and product imitation are studied in an overlapping generations model of endogenous growth where the key benefit of social capital is to promote imitation. There is also a two-way interaction between imitation and human capital. Building social capital (which brings direct utility) requires time. Because life expectancy is endogenously related to human capital, time allocation between market work and social capital accumulation is also endogenously determined. Social capital accumulation depends also on access to infrastructure. The model is calibrated numerically for a low-income country. A policy that helps to promote social capital accumulation may be very effective to foster economic growth, even if it involves offsetting cuts in other productive components of government spending, such as education outlays or infrastructure investment. Offsetting cuts in infrastructure investment, however, may be less effective. |
| Keywords: | Political Economy,Economic Theory&Research,Debt Markets,Social Capital,Emerging Markets |
| Date: | 2013–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6607&r=hrm |
| By: | Jade Wong (Centre for Social Impact, Australian School of Business, the University of New South Wales); Andreas Ortman (School of Economics, Australian School of Business, the University of New South Wales); Alberto Motta (School of Economics, Australian School of Business, the University of New South Wales); Le Zhang (School of Banking and Finance, Australian School of Business, the University of New South Wales) |
| Abstract: | Policy-makers world-wide have proposed a new contract – the “social impact bond” (SIB) – which they claim can allay the underperformance and underfunding afflicting not-for-profit sectors, by tying the private returns of (social) investors to the success of social programs (Bolton 2010; Bolton & Savell 2010; Mulgan et al. 2010a,b; Liebman 2011; Tierney & Fleishman 2011; Von Glahn & Whistler 2011). Given the high hopes governments on various levels in England, Australia, and New York have pinned on this contract format, the considerable amount of money that has recently been poured into this emerging market (e.g., http://www.bigsocietycapital.com/), and the fact that serious are program evaluations cannot be expected any time soon (Disley et al. 2011; see also McKay 2013 and Pratt 2013), we test this new contract by way of experimental methods. We report an investigation of how SIBs perform in a first-best world, where investors are rational and able to obtain hard information about not-for-profits’ performance. To this end, we use a principal-agent multi-tasking framework to compare SIBs to inputs-based (IBs) and performance-based (PBs) contracts, which represent the most commonly used contracts governments and not-for-profits write. IBs contain a piece-rate mechanism, PBs contain a non-binding bonus mechanism, and SIBs contain a mechanism that, due to the presence of an investor, offers full enforceability. Although SIBs can perfectly enforce good behavior, they also require the principal (i.e. government) to relinquish control over the agent’s (i.e. not-for-profit’s) payoff to a self-regarding investor, which prevents the principal and agent from being reciprocal. In spite of these drawbacks, in our experiment SIBs outperformed IBs and PBs. We therefore conclude that, at least in our laboratory test-bed, SIBs can indeed allay underperformance and therefore possibly underfunding of not-for-profits. |
| Keywords: | social impact bonds, principal-agent multi-tasking framework, performance-based contracts,inputs-based contracts, social finance |
| JEL: | C92 D03 L14 L15 L31 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2013-21&r=hrm |
| By: | Badinger, Harald; Egger, Peter; von Ehrlich, Maximilian |
| Abstract: | This paper assesses the strength of productivity spillovers non-parametrically in a data-set of 12 industries and 231 NUTS2 regions in 17 European Union member countries between 1992 and 2006. It devotes particular attention to measuring catching up through spillovers depending on the technology gap of a unit to the industry leader and the local human capital endowment. We find evidence of a non-monotonic relationship between the technology gap to the leader as well as human capital and growth. Spillovers are strongest for units with a small technology gap to the leader and with abundant human capital. |
| Keywords: | Absorptive capacity; Nonparametric estimation; Technology spillovers; Total factor productivity |
| JEL: | C14 N10 N14 O33 O47 R11 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9425&r=hrm |
| By: | Federico Etro (University of Venice, Ca� Foscari, Italy); Silvia Marchesi (University of Milan, Bicocca, Italy); Laura Pagani (University of Milan, Bicocca, Italy) |
| Abstract: | We analyze the labor market for painters in Baroque Rome using unique panel data on primary sales of portraits, still lifes, genre paintings, landscapes and figurative paintings. In line with the traditional artistic hierarchy of genres, average price differentials between them were high. The matched painter-patron nature of the dataset allows us to evaluate the extent to which price heterogeneity is related to unobservable characteristics of painters and patrons. We find that the market allocated artists between artistic genres to the point of equalizing the marginal return of each genre. We explain residual price differences at the employer level in terms of incentive mechanisms to induce effort in the production of artistic quality and compensating wage differentials. |
| Keywords: | Inter-industry wage differentials, Matched employer-employee data, Occupational choice, Art market |
| JEL: | C23 D8 J3 Z11 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:cue:wpaper:awp-03-2013&r=hrm |
| By: | William Mullins; Antoinette Schoar |
| Abstract: | Using a survey of 800 CEOs in 22 emerging economies we show that CEOs' management styles and philosophy vary with the control rights and involvement of the owning family and founder: CEOs of firms with greater family involvement have more hierarchical management, and feel more accountable to stakeholders such as employees and banks than they do to shareholders. They also see their role as maintaining the status quo rather than bringing about change. In contrast, professional CEOs of non-family firms display a more textbook approach of shareholder-value-maximization. Finally, we find a continuum of leadership arrangements in how intensively family members are involved in management. |
| JEL: | G3 G32 J62 M5 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19395&r=hrm |
| By: | Lauren Cohen; Dong Lou; Christopher Malloy |
| Abstract: | We explore a subtle but important mechanism through which firms manipulate their information environments. We show that firms control information flow to the market through their specific organization and choreographing of earnings conference calls. Firms that “cast” their conference calls by disproportionately calling on bullish analysts tend to underperform in the future. Firms that call on more favorable analysts experience more negative future earnings surprises and more future earnings restatements. A long-short portfolio that exploits this differential firm behavior earns abnormal returns of up to 101 basis points per month. Further, firms that cast their calls have higher accruals leading up to call, barely exceed/meet earnings forecasts on the call that they cast, and in the quarter directly following their casting tend to issue equity and have significantly more insider selling. |
| JEL: | G0 G12 G14 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19429&r=hrm |
| By: | Gary Burtless |
| Abstract: | The labor force participation of men age 60-74 has increased in recent years. Since reaching a post-World War-II low point in 1993, the share of such older men either working or looking for work jumped about 11 percentage points, from 33 percent in 1993 to 44 percent in 2010. The increase came at a time when changes in the retirement income system provided incentives for career workers to remain in the labor force longer. The share of earnings that Social Security replaced at any given age was falling due to the rise in the program’s Full Retirement Age. Workers could partly or fully offset the decline by retiring later. Workers were also becoming increasingly dependent on 401(k)s for their workplace retirement savings. Unlike traditional (defined-benefit) pension plans, 401(k) plans do not offer strong financial incentives to retire earlier rather than later. Working longer provides more time to save and earn investment income and shortens the time in retirement that must be financed with 401(k) savings. The rise in labor force participation can thus be seen as a response to changes in the retirement income system that reduce benefits available at any given age and reward working longer. The question addressed in this brief is the extent to which the increased educational attainment of older men helps explain their increased participation in the labor force.Educational attainment is a key determinant of worker productivity. Better educated workers are paid more and have more employment opportunities. At older ages they also tend to have better health. An increase in the educational attainment of older men can thus be expected to increase the willingness and ability of older men to work longer. The discussion proceeds as follows. The first section presents data on the rising educational attainment of older men and the closing of the educational gap between older and prime-age men. The second section examines the wages earned by older and younger workers to see whether these educational gains made older men more attractive to employers. The third section reports the results of an analysis assessing the extent to which the rise in educational attainment can explain the rise in participation. The final section concludes that the rise in educational attainment is a significant factor that makes older men more willing and able to remain in the labor force. But the gains in older men’s schooling attainment, both absolutely and relative to attainment of younger workers, are slowing. Therefore, the gains we have seen in labor force participation among older men will probably slow in the near future. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:crr:issbrf:ib2013-13&r=hrm |
| By: | Nabi, Mahmoud Sami |
| Abstract: | This paper compares profit sharing and debt contracts in presence of moral hazard. Its originality relatively to the existing studies consists in performing the comparison between the two contracts in a more general context. Firstly, the internal funds of the agent (entrepreneur) are enabled to vary between 0% and 99%. Secondly, an incentive mechanism is incorporated to the sharing contract in the context of a two-period relationship. Both contracts are shown to be feasible for sufficiently high internal funds of the entrepreneur. The debt contract is shown to be characterized by larger financial access than the profit sharing contract. In addition, the extension of the financial-relationship to two periods reduces moral hazard and enhances financial access for both contracts, in case of sufficiently foresighted agent and fulfillment of two distinct conditions. For the sharing contract, the additional condition stated an upper bound on the size of the project. For the debt contract, the condition is related to the threat of non-renewal of the financing in case of first-period failure. It is interestingly shown that a more restrictive threat of financing non-renewal improves financial access but lowers the second-period investment. Finally, the paper suggests policy recommendations to enhance financial access without impeding investment through taxation and subsidizing policies. |
| Keywords: | Profit sharing, debt contract, moral hazard |
| JEL: | D82 D86 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49815&r=hrm |