nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒10‒05
twenty papers chosen by
Tommaso Reggiani
University of Cologne

  1. Management-Employee Relations, Firm Size And Job Satisfaction By Aysýt Tansel; Þaziye Gazioðlu
  2. Parental Leave and Children's Schooling Outcomes: Quasi-Experimental Evidence from a Large Parental Leave Reform By Danzer, Natalia; Lavy, Victor
  3. Performance Pay and Enterprise Productivity: The Details Matter By Kato, Takao; Kauhanen, Antti
  4. Optimal Contract Orders and Relationship-Specific Investments in Vertical Organizations By Sarah Parlane; Ying-Yi Tsai
  5. Appendix to "Precocious Albion: a New Interpretation of the British Industrial Revolution" By Morgan Kelly; Joel Mokyr; Cormac Ó Gráda
  6. Online Homework Management Systems: Should We Allow Multiple Attempts? By Rhodes, M. Taylor; Sarbaum, Jeffrey K.
  7. Child Labour and Inequality By Simone D\'Alessandro; Tamara Fioroni
  8. The impact of class absenteeism on undergraduates’ academic performance: evidence from an elite Economics school in Portugal By Aurora A.C. Teixeira
  9. Addressing Return-to-Work Issues in the Federal Employees' Compensation Act with Administrative Data. By Nan Maxwell; Albert Liu; Nathan Wozny; Caroline Massad Francis
  10. On Repeated Moral Hazard with a Present Biased Agent By Luigi Balletta; Giovanni Immordino
  11. Peer Effects in the Workplace By Cornelissen, Thomas; Dustmann, Christian; Schönberg, Uta
  12. UNDERSTANDING PAY-FOR-PERFORMANCE INSTATE GOVERNMENTS: A Diffusion Theory Approach By Sangyub Ryu; John Ronquillo; Cora Terry
  13. Unstructured Bargaining over an Endogenously Produced Surplus and Fairness Ideals – An Experiment By Andreas Orland; Michael W.M. Roos
  14. Strategic Determination of Renegotiation Costs By Akitoshi Muramoto
  15. Voice Effects on Attitudes towards an Impartial Decision Maker: Experimental Evidence By Marco Kleine; Pascal Langenbach; Lilia Zhurakhovska
  16. Self-Serving Use of Equity Rules in Bargaining with Asymmetric Outside Options By Hennig-Schmidt, Heike; Irlenbusch, Bernd; Rilke, Rainer Michael; Walkowitz, Gari
  17. Proactive Management, Reactive Management, and Perceived Political Support By Young-Joo Lee; Sangyub Ryu
  18. A Web Survey Analysis of the Subjective Well-being of Spanish Workers By Guzi, Martin; de Pedraza, Pablo
  19. Too Old to Work, Too Young to Retire? By Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Andrea Ichino
  20. Country Differences in Ultimatum Wage Bargaining with a Real Task: Evidence from Greece, Spain and the UK By Aurora García-Gallego; Nikolaos Georgantzís; Ainhoa Jaramillo-Gutiérrez

  1. By: Aysýt Tansel (Middle East Technical University, Turkey); Þaziye Gazioðlu (Middle East Technical University, Turkey)
    Abstract: This paper investigates the job satisfaction in relation to managerial attitudes towards employees and firm size using the linked employer-employee survey results in Britain.We first investigate the managementemployee relationships and the firm size using maximum likelihood probit estimation . Next various measues of job satisfaction are related to the management-employee relations via maximum likelihood ordered probit estimates. Four measures of job satisfaction that have not been used often are considered. They are satisfaction with influence over job; satisfaction with amount of pay; satisfaction with sense of achievement and satisfaction with respect from supervisors. Main findings indicate that managementemployee relationships are less satisfactory in the large firms than in the small firms. Job satisfaction levels are lower in large firms. Less satisfactory management-employee relationships in the large firms may be a major source of the observed lower level of job satisfaction in them. These results have important policy implications from the point of view of the firm management while achieving the aims of their organizations in particular in the large firms in the area of management-employee relationships. Improving the management-employee relations in large firms will increase employee satisfaction in many respects as well as increase productivity and reduce turnover. The nature of the management-employee relations with firm size and job satisfaction has not been investigated before.
    Date: 2013
  2. By: Danzer, Natalia (Ifo Institute for Economic Research); Lavy, Victor (Hebrew University, Jerusalem)
    Abstract: This paper investigates the question whether long-term human capital outcomes are affected by the duration of maternity leave, i.e. by the time mothers spend at home with their newborn before returning to work. Employing RD and difference-in-difference approaches, this paper exploits an unanticipated reform in Austria which extended the maximum duration of paid and job protected parental leave from 12 to 24 months for children born on July 1, 1990 or later. We use test scores from the Austrian PISA test of birth cohorts 1990 and 1987 as measure of human capital. The evidence suggest no significant overall impact of the extended parental leave mandate on standardized test scores at age 15, but that the subgroup of boys of highly educated mothers have benefited from this reform while boys of low educated mothers were harmed by it.
    Keywords: parental leave reform, maternal employment, human capital, child development, cognitive skills
    JEL: J13 J24 J22
    Date: 2013–09
  3. By: Kato, Takao; Kauhanen, Antti
    Abstract: Much of the empirical literature on PRP (Performance Related Pay) focuses on a question of whether the firm can increase firm performance in general and enterprise productivity in particular by introducing PRP and if so, how much. However, not all PRP programs are created equal and PRP programs vary significantly in a variety of attributes. This paper provides novel and rigorous evidence on the productivity effect of varying attributes of PRP and shows that the details of PRP indeed matter. In so doing we exploit the panel nature of our Finnish Linked Employer-Employee Data on the details of PRP. We first establish that the omitted variable bias is serious, makes the cross-sectional estimates on the productivity effect of the details of PRP biased upward substantially. Relying on the fixed effect estimates that account for such bias, we find: (i) group incentive PRP is more potent in boosting enterprise productivity than individual incentive PRP; (ii) group incentive PRP with profitability as a performance measure is especially powerful in raising firm productivity; (iii) when a narrow measure (such as cost reduction) is already used, adding another narrow measure (such as quality improvement) yields no additional productivity gain; and (iv) PRP with greater Power of Incentive (the share of PRP in total compensation) results in greater productivity gains yet returns to Power of Incentive diminishes very slowly.
    JEL: M52 J33 J24 J53 O53
    Date: 2013–09–26
  4. By: Sarah Parlane (University College Dublin); Ying-Yi Tsai (National University of Kaohsiung)
    Abstract: This paper characterizes the optimal contracts issued to suppliers when delivery is subject to disruptions and when they can invest to reduce such a risk. When investment is contractible dual sourcing is generally optimal because it reduces the risk of disruption. The manufacturer (buyer) either issues symmetric contracts or selects one supplier as a major provider who invests while the buffer supplier does not. An increased reliance on single sourcing or on a major supplier is optimal under moral hazard. Indeed, we show that order consolidation increases the manufacturer’s profits because it serves as an incentive device in inducing investment.
    Keywords: Moral Hazard; Vertical Organization; Supply Base Management;Contract Order Size; Relationship-specific Investment; Strategic Outsourcing
    JEL: D23 D86 L24
    Date: 2013–10–01
  5. By: Morgan Kelly (University College Dublin); Joel Mokyr (Northwestern University); Cormac Ó Gráda (University College Dublin)
    Abstract: See WP13/11
    Keywords: Industrial Revolution, Human Capital, Economic Growth
    Date: 2013–09–27
  6. By: Rhodes, M. Taylor (Lawrence University); Sarbaum, Jeffrey K. (University of North Carolina at Greensboro, Department of Economics)
    Abstract: Conventional pencil and paper wisdom suggests that allowing multiple attempts on homework will lead to more time spent on homework, higher homework grades, and better exam performance. For a variety of reasons, homework is increasingly being auto-administered online. This paper discusses the results of a quasi-experiment designed to evaluate student behavior under single and multiple attempt homework settings using an online homework management system. The paper explores whether multiple attempts lead to more effort and improved performance, and evaluates alternative, less desirable, behaviors that are potentially incentivized. We find that multiple attempts leads to gaming behavior that results in grade inflation without improvement in learning outcomes. The findings are important in that they provide guidance and insight into best practices to maximize student outcomes when choosing online homework settings.
    Keywords: Student effort and performance; Assessment settings; Multiple attempts
    JEL: A22 C93 D01 I21
    Date: 2013–10–01
  7. By: Simone D\'Alessandro (University of Pisa); Tamara Fioroni (Department of Economics (University of Verona))
    Abstract: This paper focuses on the evolution of child labour, fertility and human capital in an economy characterized by two types of workers, low- and high-skilled. This heterogeneity allows an endogenous analysis of inequality generated by child labour. More specifically, according to empirical evidence, we offer an explanation for the emergence of a vicious cycle between child labour and inequality. The basic intuition behind this result arises from the interdependence between child labour and fertility decisions. Furthermore, we investigate how child labour regulation policies can influence the welfare of the two groups in the short run, and the income distribution in the long run. We find that conflicts of interest may arise between the two groups
    Keywords: Child Labour, Fertility, Human capital, Inequality
    JEL: J13 J24 J82 K31
    Date: 2013–10
  8. By: Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto; OBEGEF; UTEN)
    Abstract: The empirical literature focusing mainly on the USA suggests that class absenteeism undermines students’ academic performance and that an enforced mandatory attendance policy may be beneficial. Based on a different cultural and economic context, and using data on 146 second-year management students enrolled in a Macroeconomics course at an elite economics school in Portugal, it is shown that even when controlling for potential endogenous factors associated to attendance and academic performance, absenteeism considerably lowers the students’ final grade (about 2 points in a 0-20 point grading scheme). In addition, it is established that a compulsory, though flexible, attendance policy contributes to improving students’ academic performance.
    Keywords: Absenteeism; Academic performance; Economics; Management; University; Portugal
    JEL: I21 I29 J22 J24
    Date: 2013–09
  9. By: Nan Maxwell; Albert Liu; Nathan Wozny; Caroline Massad Francis
    Keywords: ADRA, DOL, administrative data, Employment
    JEL: J
    Date: 2013–04–26
  10. By: Luigi Balletta (Università di Palermo); Giovanni Immordino (Università di Salerno and CSEF)
    Abstract: This paper introduces time inconsistent preferences into a moral hazard setting where the agent is risk-averse. We derive a necessary optimality condition on the consumption allocation that is different from the so-called Inverse Euler Equation of Rogerson (1985). Specifically, inverse marginal utility is not a martingale, rather it follows a partial adjustment process. If the bias for the present is sufficiently large the optimal allocation will leave the agent with the desire to borrow. We extend the analysis to the case in which the principal does not know if the agent is time consistent or not. Finally, we show that in a setting with a risk-neutral agent and limited liability everything is as if the principal faces a time consistent agent.
    Keywords: repeated moral hazard, time-inconsistency
    JEL: D82 D03 E21 D86
    Date: 2013–09–25
  11. By: Cornelissen, Thomas (University College London); Dustmann, Christian (University College London); Schönberg, Uta (University College London)
    Abstract: Existing evidence on peer effects in a work environment stems from either laboratory experiments or from real-word studies referring to a specific firm or specific occupation. Yet, it is unclear to what extent these findings apply to the labor market in general. In this paper, therefore, we investigate peer effects in the workplace for a representative set of workers, firms, and occupations with a focus on peer effects in wages rather than productivity. Our estimation strategy – which links the average permanent productivity of workers' peers to their wages – circumvents the reflection problem and accounts for the endogenous sorting of workers into peer groups and firms. On average, we find only small peer effects in wages. We also find small peer effects in the type of high skilled occupations which more closely resemble those used in studies on knowledge spillover. In the type of low skilled occupations analyzed in existing studies on social pressure, in contrast, we find larger peer effects, about half the size of those identified in similar studies on productivity.
    Keywords: knowledge spillover, social pressure, wage structure
    JEL: J24 J31
    Date: 2013–09
  12. By: Sangyub Ryu (International University of University); John Ronquillo (DePaul University); Cora Terry (The University of Georgia)
    Abstract: Since the New Public Management is emphasized, the practices of the business sector have been introduced to the public sector without careful assessment. One of the examples is the adoption of pay-for-performance across state governments. Although theories of pay-for-performance may be compelling, scholars have found failures of payfor-performance in the public sector. This study applies a diffusion theory to understand why state governments have adopted pay-for-performance although its effectiveness was not confirmed. Findings show that state governments tend to adopt pay-for-performance as their neighboring states have previously adopted it, but the marginal probability of adoption decreases as more neighbors have adopted pay-for-performance.
    Keywords: pay-for-performance, policy diffusion
    Date: 2013–09
  13. By: Andreas Orland; Michael W.M. Roos
    Abstract: Fairness considerations are important determinants of behavior in unstructured bargaining situations with equal bargaining power. If the surplus over which the bargaining takes place was created by separate, individual efforts, several entitlement-related fairness ideals might be relevant. In our experiment we first elicit subjects’ fairness ideals using a questionnaire. In the following production phase each player generates output by luck, individual effort and talent. We analyze whether the elicited fairness ideals guide subjects’ behavior in the subsequent bargaining in which the joint output is distributed among two individuals. We find that bargaining claims deviate significantly from the elicited fairness ideals and are strongly related to performance if one individual had produced more than the partner. These findings contrast the previous literature on fairness ideals and enrich the findings on self-serving fairness.
    Keywords: Fairness; unstructured bargaining; self-serving fairness; opportunism
    JEL: C91 D39 D63
    Date: 2013–08
  14. By: Akitoshi Muramoto (Graduate School of Economics, Kyoto University)
    Abstract: Recently, some literature on incomplete contracts studies the cases where renegotiations take place inefficiently. We extend the incomplete contract model in Hart (2009) by assuming that one party chooses an action which affects renegotiation costs. In our model, renegotiation costs are determined endogenously. We characterize the condition that she can get higher payoff by manipulating renegotiation costs than when she cannot manipulate renegotiation costs and renegotiations take place efficiently. Whereas she chooses positive renegotiation costs, renegotiations never occur on the equilibrium paths. They work just as "credible threat". Her equilibrium share ratio of the ex ante bargaining surplus is higher than her bargaining power. As an application, we discuss an investment problem by using a variant of our basic model. We show that the agents mitigate the investment problem by setting some positive renegotiation costs and increasing a high skilled agent's share ratio of the ex ante bargaining surplus to give her larger incentive of investment.
    JEL: D23 D86 C78
    Date: 2013–09
  15. By: Marco Kleine (Max Planck Institute for Research on Collective Goods, Bonn); Pascal Langenbach (Max Planck Institute for Research on Collective Goods, Bonn); Lilia Zhurakhovska (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: The opportunity to voice one’s opinion about a decision is a fundamental aspect of procedural fairness and applies to a large variety of economic interactions. Voice may influence decision makers, but at the same time it shapes behavior of those who can voice their opinion. We study the latter effect in a laboratory experiment. More precisely, we analyze the impact of voicing one’s opinion in a decision making process on people’s attitude towards an impartial decision maker whose judgment is not biased by any personal stake. The attitude is measured by generosity towards the decision maker in a dictator game that follows the decision making process. We show that voice procedures substantially improve the attitude towards the decision maker: average transfers are 90% higher in voice treatments than in baseline. And importantly, these positive voice effects in terms of higher transfers occur irrespectively of the decision made by the decision maker. Hence, subjects seem to derive utility merely from stating their opinion rather than from influencing the decision in their favor. In that regard, our results are in contrast to previous findings from settings with self-interested decision makers (e.g., principal-agent relationships), in which voice fosters positive reciprocal behavior for favorable outcomes, as well as negative reciprocal behavior for unfavorable outcomes.
    Keywords: fairness, Communication, voice, procedure, impartial decision maker, participative decision making, laboratory experiment
    JEL: D63 K23 D23 K40 C91 D03
    Date: 2013–07
  16. By: Hennig-Schmidt, Heike (University of Bonn); Irlenbusch, Bernd (University of Cologne); Rilke, Rainer Michael (University of Cologne); Walkowitz, Gari (University of Cologne)
    Abstract: We experimentally investigate multiple notions of equity in ultimatum bargaining with asymmetric outside options. Building on the generalized equity principle formulated by Selten (1978), we derive three different equity rules that can explain 43% of all offers. Our within-subject design further allows us to show that proposers use different equity rules and apply them in a self-serving manner. They tend to follow the rules that suggest the highest payoff for them. Responders exhibit a similar pattern of behavior. Combined, these tendencies lead to high inefficiencies due to frequent rejections.
    Keywords: Outside Options, Equity Principle, Ultimatum Game
    JEL: C71 C72 C78 C91 D63
    Date: 2013–09
  17. By: Young-Joo Lee (The University of Texas at Dallas); Sangyub Ryu (International University of University)
    Abstract: Starting from the assumption that political support is essential for public managers to manage their organizations, this study investigates factors that enhance political leaders' support toward top executives in public organizations. Based on the literature of proactive behaviors, this study tests hypothesis that proactive managers are more likely to acquire political support. Analyses on more than 500 cases in Texas school districts find that superintendents perceive more support from their school board members as they proactively interact with their board members, proactively express their opinions to the board, protect their organizations from external events, and exercise strong discretion in decision making within their organization. However, too much proactiveness threatening discretion of school board members does not help obtaining political support. This study suggests that top managers need to take strategic approach to enhance political support. Lastly, this study preliminarily finds that political support is significantly and positively associated with organizational performance.
    Keywords: Inequality, proactive management, reactive management, political support, performance
    Date: 2013–09
  18. By: Guzi, Martin (Masaryk University); de Pedraza, Pablo (Universidad de Salamanca)
    Abstract: This paper makes use of a large sample of individual data obtained from web surveys in the WageIndicator project. Data includes extensive information on the quality of working conditions together with different well-being indicators. The paper emphasizes the role of work-related characteristics as a specific and very important aspect of life. In our analysis, we demonstrate the role of working conditions in the following three domains: overall life-satisfaction; satisfaction with one’s job; and satisfaction with the combination of family and work. The paper also contributes to the ongoing debate on web survey data quality, reliability, and validity for scientific use. It demonstrates how social sciences can benefit from the use of web survey data in order to overcome the limits of traditional information sources.
    Keywords: subjective well-being, web-surveys, working conditions
    JEL: J28 J81
    Date: 2013–09
  19. By: Andrea Ichino; Guido Schwerdt; Rudolf Winter-Ebmer; Andrea Ichino
    Abstract: We study whether employment prospects of old and young workers differ after a plant closure. Using Austrian administrative data, we show that old and young workers face similar displacement costs in terms of employment in the long-run, but old workers lose considerably more initially and gain later. We interpret these findings using a search model with retirement as an absorbing state, that we calibrate to match the observed patterns. Our finding is that the dynamics of relative employment losses of old versus young workers after a displacement are mainly explained by different opportunities of transition into retirement. In contrast, differences in layoff rates and job offer arrival rates cannot explain these patterns. Our results support the idea that retirement incentives, more than weak labor demand, are responsible for the low employment rates of older workers.
    Keywords: Aging, Employability, Plant Closures, Matching
    JEL: J14 J65
    Date: 2013–08
  20. By: Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Nikolaos Georgantzís (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Ainhoa Jaramillo-Gutiérrez (LEE-Department of Economics, Universitat Jaume I-Castellón, ERICES-University of Valencia, Spain)
    Abstract: We study ultimatum bargaining over the wage that should be paid in order to have a subject perform a given real task. Our results are obtained from experiments run in Greece, Spain and the UK. We find significantly higher wage offers and lower acceptance probabilities in the UK than in the other two countries. Interestingly, the combination of these two effects leads to higher wages in the British pool, without reducing market efficiency as compared to Spain and Greece. Country differences in both employer and employee behavior have a clear gender component.
    Keywords: ultimatum bargaining, real task, country differences
    JEL: C91 D03 J16 J31
    Date: 2013

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