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on Human Capital and Human Resource Management |
| By: | Peter J. Kuhn; Marie-Claire Villeval |
| Abstract: | We conduct a real-effort experiment where participants choose between individual compensation and team-based pay. In contrast to tournaments, which are often avoided by women, we find that women choose team-based pay at least as frequently as men in all our treatments and conditions, and significantly more often than men in a well-defined subset of those cases. Key factors explaining gender patterns in attraction to co-operative incentives across experimental conditions include women’s more optimistic assessments of their prospective teammate’s ability and men’s greater responsiveness to efficiency gains associated with team production. Women also respond differently to alternative rules for team formation in a manner that is consistent with stronger inequity aversion |
| JEL: | C91 J16 J24 J31 M5 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19277&r=hrm |
| By: | Edmans, Alex; Goldstein, Itay; Zhu, John |
| Abstract: | This paper studies multi-agent optimal contracting with cost synergies. We model synergies as the extent to which effort by one agent reduces his colleague's marginal cost of effort. An agent's pay and effort depend on the synergies he exerts, the synergies his colleagues exert on him and, surprisingly, the synergies his colleagues exert on each other. It may be optimal to "over-work" and "over-incentivize" a synergistic agent, due to the spillover effect on his colleagues. This result can rationalize the high pay differential between CEOs and divisional managers. An increase in the synergy between two particular agents can lead to a third agent being endogenously excluded from the team, even if his own synergy is unchanged. This result has implications for optimal team composition and firm boundaries. |
| Keywords: | complementarities; contract theory; influence; multiple agents; principal-agent problem; synergies; teams |
| JEL: | D86 J31 J33 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9559&r=hrm |
| By: | Lisa Barrow; Cecilia E. Rouse |
| Abstract: | Using survey data from a field experiment in the U.S., we test whether and how financial incentives change student behavior. We find that providing post-secondary scholarships with incentives to meet performance, enrollment, and/or attendance benchmarks induced students to devote more time to educational activities and to increase the quality of effort toward, and engagement with, their studies; students also allocated less time to other activities such as work and leisure. While the incentives did not generate impacts after eligibility had ended, they also did not decrease students’ inherent interest or enjoyment in learning. Finally, we present evidence suggesting that students were motivated more by the incentives provided than simply the effect of giving additional money, and that students who were arguably less time-constrained were more responsive to the incentives as were those who were plausibly more myopic. Overall these results indicate that well-designed incentives can induce post-secondary students to increase investments in educational attainment. |
| JEL: | D03 I2 J24 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19351&r=hrm |
| By: | Garnero, Andrea; Kampelmann, Stephan; Rycx, François |
| 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 show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. While gender diversity is found to generate significant gains in high-tech/knowledge intensive sectors, the opposite result is obtained in more traditional industries. Estimates neither vary substantially with firm size nor point to sizeable productivity-wage gaps except for age diversity. |
| Keywords: | labour diversity; productivity; wages; linked panel data; GMM |
| JEL: | D24 J24 J31 M12 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:1304&r=hrm |
| 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. |
| Keywords: | experiment; morality; organization; pivotality |
| JEL: | C91 D01 D03 D23 D63 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9522&r=hrm |
| By: | Iossa, Elisabetta; Rey, Patrick |
| Abstract: | We study how career concerns affect the dynamics of incentives in a multi-period contract, when the agent’s productivity is a stochastic function of his past productivity and investment. We show that incentives are stronger and performance is higher when the contract approaches its expiry date. Contrary to common wisdom, long-term contracts may strengthen reputational effects whereas short-term contracting may be optimal when investment has persistent, long-term effects. |
| Keywords: | career concerns; career duration; contract renewal; dynamic incentives; reputation |
| JEL: | D21 D23 D86 L24 L51 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9571&r=hrm |
| By: | Giuseppe Croce; Edoardo Di Porto; Emanuela Ghignoni; Andrea Ricci |
| Abstract: | This paper analyzes the role of the employer in workplace training, a novelty with respect to the literature on this topic. Taking advantage of a unique dataset on Italy, we study how individual employer profile and the agglomeration of employers influence firms’ propensity to invest in training. Our findings show that highly educated employers have a greater propensity to invest in workplace training. Moreover, we are able to capture the effect of employers’ human capital agglomeration on the training decision. We assert that such agglomeration leads to two different alternative scenarios: 1) a poaching effect may prevail, therefore competition among employers induces less propensity to train workers; 2) a positive knowledge spillover effect may prevail leading to a greater propensity to engage in training. We test these two options discovering that in the Italian case, where small businesses are prominent, the first effect is stronger. Several econometrics issues are considered in our empirical strategy: the skewed and bounded nature of the training decision indicator, the endogeneity issues derived from the agglomeration effect as well as the cross section dependence problems affecting standard errors. |
| Keywords: | workplace training; poaching; knowledge spillovers; entrepreneurship cluster, employer’s education, social capital, proximity. |
| JEL: | J24 O15 O18 R23 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:sap:wpaper:wp162&r=hrm |
| By: | Iossa, Elisabetta; Martimort, David |
| Abstract: | A risk averse agent gathers information on productivity shocks and produces accordingly on behalf of his principal. Information gathering is imperfect so that the agent has either complete or no knowledge at all of those shocks. The model allows for moral hazard in information gathering, private information on productivity shocks and moral hazard on operating effort. Two polar scenarios of the agency literature with either pure hidden action (the agent exerts operating effort not knowing yet the realization of the shock) or pure hidden information (the agent knows that shock when exerting operating effort) arise endogenously with positive probability. An optimal menu of linear contracts mixes high-powered, productivity-dependent screening options following “good news” with a fixed low-powered option that solves a pure moral hazard problem otherwise. |
| Keywords: | hidden action; hidden information; Incentive mechanisms; information gathering |
| JEL: | D82 H41 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9552&r=hrm |
| By: | Gabaix, Xavier; Landier, Augustin; Sauvagnat, Julien |
| Abstract: | In the "size of stakes" view quantitatively formalized in Gabaix and Landier (2008), CEO compensation is determined in a competitive talent market, and re flects the size of firms affected by talent. This paper offers empirical update on this view. The years 2004-2011, which include the recent crisis, were not part of the initial study and oer a laboratory to examine the theory as they include new positive and negative shocks to the size of large firms. Executive compensation at the top (ex ante) did closely track the evolution of average rm value during those years. During the crisis (2007 - 2009), average total firm value decreased by 17%, and CEO pay decreased by 28%. During 2009-2011, we observe a rebound of firm value by 19% and of CEO pay increased by 22%. These fairly proportional changes provide a validity check in favor of the "size of stakes" view. |
| Keywords: | assignment models; economics of superstars; Executive pay; inequality; matching. |
| JEL: | G34 J24 J3 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9498&r=hrm |
| By: | Hart, Oliver; Zingales, Luigi |
| Abstract: | We study the role of fiscal policy in a complete markets model where the only friction is the non-pledgeability of human capital. We show that the competitive equilibrium is constrained inefficient, leading to too little risky investment. We also show that fiscal policy following a large negative shock can increase ex ante welfare. Finally, we show that if the government cannot commit to the promised level of fiscal intervention, the ex post optimal fiscal policy will be too small from an ex ante perspective. |
| Keywords: | aggregate shocks; fiscal policy; liquidity; nonpledgeability; pecuniary externalities |
| JEL: | E41 E51 G21 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9537&r=hrm |
| By: | Orla Doyle; Colm Harmon; James J. Heckman; Caitriona Logue; Seong Moon |
| Abstract: | The literature on skill formation and human capital development clearly demonstrates that early investment in children is an equitable and efficient policy with large returns in adulthood. Yet little is known about the mechanisms involved in producing these long-term effects. This paper presents early evidence on the nature of skill formation based on an experimentally designed, five-year home visiting program in Ireland targeting disadvantaged families - Preparing for Life (PFL). We examine the impact of investment between utero to 18 months of age on a range of parental and child outcomes. Using the methodology of Heckman et al. (2010a), permutation testing methods and a stepdown procedure are applied to account for the small sample size and the increased likelihood of false discoveries when examining multiple outcomes. The results show that the program impact is concentrated on parental behaviors and the home environment, with little impact on child development at this early stage. This indicates that home visiting programs can be effective at offsetting deficits in parenting skills within a relatively short timeframe, yet continued investment may be required to observe direct effects on child development. While correcting for attrition bias leads to some changes in the precision of estimates, overall the results are quite similar. |
| JEL: | C12 C93 J13 J24 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19316&r=hrm |
| By: | Card, David (University of California, Berkeley); Cardoso, Ana Rute (IAE Barcelona (CSIC)); Kline, Patrick (University of California, Berkeley) |
| Abstract: | An influential recent literature argues that women are less likely to initiate bargaining with their employers and are (often) less effective negotiators than men. We use longitudinal wage data from Portugal, matched to balance sheet information on employers, to measure the relative bargaining power of men and women and assess the impact of the gender gap in bargaining strength on the male-female wage gap. We show that a model with additive fixed effects for workers and gender-specific fixed effects for firms provides a close approximation to the wage structure for both men and women. Building on this model we present three complementary approaches to identifying the impact of differential bargaining strength. First, we perform a simple decomposition by assigning the firm-specific wage premiums for one gender to the other. Second, we relate the wage premiums for men and women to measures of employer profitability. Third, we show that changes in firm-specific profitability have a smaller effect on the wage growth of female than male employees. All three approaches suggest that women are paid only 85-90% of the premiums that men earn at more profitable firms. Overall, we estimate that the shortfall in women‘s relative bargaining power explains around 3 percentage points – or 10-15% – of the gender wage gap in Portugal. |
| Keywords: | wage differentials, discrimination, gender, linked employer-employee data |
| JEL: | J16 J31 J71 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7592&r=hrm |
| By: | Claudio Loderer; René Stulz; Urs Waelchli |
| Abstract: | As firms have more assets in place, more of management’s limited attention is focused on managing assets in place rather than developing new growth options. Consequently, as firms grow older, they have fewer growth options and a lower ability to generate new growth options. This simple theory predicts that Tobin’s q falls with age. Further, competition in the product market is expected to slow down the decrease in Tobin’s q because it forces firms to look for alternative sources of rents. Similarly, greater competition in the labor market reduces the decrease in Tobin’s q with age because old firms are in a better position to hire employees that can help with innovation. In contrast, competition in the market for corporate control should accelerate the decline because it forces management to focus more on managing assets in place whose performance is more directly observable than on developing growth options where results may not be observable for some time. We find strong support for these predictions in tests using exogenous variation in competition. |
| JEL: | G30 L20 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19428&r=hrm |
| By: | Garicano, Luis; Rayo, Luis |
| Abstract: | An expert must train a novice. The novice initially has no cash, so he can only pay the expert with the accumulated surplus from his production. At any time, the novice can leave the relationship with his acquired knowledge and produce on his own. The sole reason he does not is the prospect of learning in future periods. The profit-maximizing relationship is structured as an apprenticeship, in which all production generated during training is used to compensate the expert. Knowledge transfer takes a simple form. In the first period, the expert gifts the novice a positive level of knowledge, which is independent of the players' discount rate. After that, the novice's total value of knowledge grows at the players' discount rate until all knowledge has been transferred. The inefficiencies that arise from this contract are caused by the expert's artificially slowing down the rate of knowledge transfer rather than by her reducing the total amount of knowledge eventually transferred. We show that these inefficiencies are larger the more patient the players are. Finally, we study the impact of knowledge externalities across players. |
| Keywords: | general human capital; knowledge; relational contracts; skills |
| JEL: | C73 J24 L14 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9460&r=hrm |
| By: | Mevlude Akbulut Yuksel (Dalhousie University, Halifax); Mutlu Yuksel (Dalhousie University, Halifax) |
| Abstract: | This paper examines the long-term direct and spillover effects of large-scale human capital loss caused by the persecution of Jewish professionals in Nazi Germany. Using region-by-cohort variation in the Jewish population as a quasi-experiment, we find that on average German children who were of school age during the persecutions have fewer years of schooling in adulthood, and are less likely to finish high school or go to college. These results are robust after controlling for regional unemployment and income, wartime destruction, Nazi and Communist Party support, the compulsory schooling reform, migration, urbanization and mortality. |
| Keywords: | human capital formation, children, Jewish history |
| JEL: | I21 I28 J24 N34 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hic:wpaper:154&r=hrm |
| By: | Jia, Ruixue; Kudamatsu, Masayuki; Seim, David |
| Abstract: | Who becomes a top politician in China? We focus on provincial leaders, a pool of candidates for top political office, and examine how their chance of being promoted depends on performance - measured by provincial economic growth - and connections with top politicians - measured by past joint work in the same branch of government. A simple theoretical framework suggests that performance and connections may interact, an aspect ignored in the previous literature. Over the period 1993-2009, we find a positive correlation between promotion and growth that is robustly stronger for connected provincial leaders than for unconnected ones. This evidence indicates that performance and connections are complements in the Chinese political selection process. Auxiliary evidence suggests that the documented promotion pattern does not distort the allocation of talent. |
| Keywords: | Chinese provincial leaders; political selection in autocracy; promotion; social networks |
| JEL: | O53 P26 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9523&r=hrm |
| By: | Ing-Haw Cheng; Harrison Hong; Kelly Shue |
| Abstract: | We find support for two key predictions of an agency theory of unproductive corporate social responsibility. First, increasing managerial ownership decreases measures of firm goodness. We use the 2003 Dividend Tax Cut to increase after-tax insider ownership. Firms with moderate levels of insider ownership cut goodness by more than firms with low levels (where the tax cut has no effect) and high levels (where agency is less of an issue). Second, increasing monitoring reduces corporate goodness. A regression discontinuity design of close votes around the 50% cut-off finds that passage of shareholder governance proposals leads to slower growth in goodness. |
| JEL: | D03 G02 G10 G3 G39 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19432&r=hrm |
| By: | Nicolò Bellanca (Università degli Studi di Firenze); Giancarlo Pichillo |
| Abstract: | According to Plato, thymòs – a notion denoting the human need for recognition – triggers off the most powerful and overwhelming human passions. Indeed, any action originated and nurtured by thymòtic passions places its own raison d’être in itself. The acts motivated by thymòs can either improve or (even) worsen someone’s wellness: they do not entail any payoff in the present or future, and their nature is not influenced nor mitigated by monetary incentives. Moreover, it follows that since identity is based on the others’ recognition (both individuals and social groups), then indulging with thymòtic passions and building up someone’s own identity are exactly the same process. Indeed, thymòtic passions are identitarian passions. This paper argues the relevance of the thymòtic approach. We do propose a conceptual framework that we reckon is useful and innovative in order to study and interpret these peculiar forms of human action. We also point out the social and “environmental” conditions that stimulate their appearance. |
| Keywords: | Passion; Rationality; Identity; Need for Recognition; Institutional change, Homo oeconomicus; Thymòs. |
| JEL: | A12 B59 Z13 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2013_12.rdf&r=hrm |
| By: | Novarese, Marco; Di Giovinazzo, Viviana |
| Abstract: | This article uses university administration data to investigate the relation between student behavior (rapid response in finalizing enrolment procedures) and academic performance. It shows how student promptness in enrolling, or lack of it, can prove a useful forecast of academic success. Several explanations can be given, including simply the greater or lesser tendency to procrastinate. |
| Keywords: | procrastination, academic performance, motivation |
| JEL: | D83 D99 I21 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49746&r=hrm |