nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2013‒11‒02
seventeen papers chosen by
Tommaso Reggiani
University of Cologne

  1. Objective versus Subjective Performance Evaluations By Terstiege, Stefan
  2. Incentives and creativity in groups By Ramm, Joachim; Tjøtta, Sigve; Torsvik, Gaute
  3. Equilibrium Contracts and Firm-sponsored Training By Pontus Rendahl
  4. Becoming “We” Instead of “I”, Identity Management and Incentives in the Workplace. By Jocelyn Donze; Trude Gunnes
  5. New Firms and New Forms of Work By Andreas Koch; Daniel Pastuh; Jochen Späth
  6. Do Incentive Systems Spur Work Motivation of Inventors in High Tech Firms ? A Group-Based Perspective By Nathalie Lazaric; Alain Raybaut
  7. The Money Value of a Man By Mark Huggett; Greg Kaplan
  8. Partnership and trust in gift-exchange games. By Benoît Chalvignac
  9. Internationalisation of Education and Returns in the Labour Market By Poot, Jacques; Roskruge, Matthew
  10. Money on the Table? Firms' and Workers' Gains from Productivity Spillovers through Worker Mobility By Stoyanov, Andrey; Zubanov, Nikolay
  11. Assessment of the capacity, incentives, and performance of agricultural extension agents in western Democratic Republic of the Congo: By Ragasa, Catherine; Ulimwengu, John M.; Randriamamonjy, Josee; Badibanga, Thaddée
  12. Child Labour and Inequality By Fioroni, Tamara; D'Alessandro, Simone
  13. Precontractual Investigation and Sequential Screening By Terstiege, Stefan
  14. Heterogeneous Sports Participation and Labour Market Outcomes in England By Lechner, Michael; Downward, Paul
  15. The Formal Sector Wage Premium and Firm Size for Self-employed Workers By Olivier Bargain; Eliane El Badaoui; Prudence Kwenda; Eric Strobl; Frank Walsh
  16. Portfolio Performance Measure and A New Generalized Utility-based N-moment Measure By Monica Billio; Gregory Jannin; Bertrand Maillet; Loriana Pelizzon
  17. Exploring the Performativity Turn in Management Studies By Diedrich, Andreas; Eriksson-Zetterquist, Ulla; Ewertsson, Lena; Hagberg, Johan; Hallin, Anette; Lavén, Fredrik; Lindberg, Kajsa; Raviola, Elena; Rindzeviciute, Egle; Walter, Lars

  1. By: Terstiege, Stefan
    Abstract: Why does incentive pay often depend on subjective rather than objective performance evaluations? After all, subjective evaluations entail a credibility issue. While the most plausible explanation for this practice is lack of adequate objective measures, I argue that subjective evaluations might sometimes also be used to withhold information from the worker. I furthermore argue that withholding information is particularly important under circumstances where the credibility issue is small. The statements are derived from a two-stage principal-agent model in which the stochastic relationship between effort and performance is unknown.
    Keywords: Performance evaluation; principal-agent; moral hazard
    JEL: D83 D86 M12 M52
    Date: 2013–08–01
  2. By: Ramm, Joachim (Minestry of Local Governmenet and Regional Development); Tjøtta, Sigve (University of Bergen); Torsvik, Gaute (University of Bergen)
    Abstract: It has been argued that monetary incentives restrain individual creativity and hamper performance in jobs requiring out of the box thinking. This paper reports from an experiment designed to test if the negative incentive effect is present also when individuals work together to solve such problems. We do not find a negative impact of incentives on group performance. As a comparison we ran the same experiment (the Candle Problem) with and without incentives for individuals as well. Incentives did not reduce performance there either. Comparing individuals with groups we find that team-work facilitates creative problems solving. Individuals appear to be more creative when working together than when working alone.
    Keywords: Incentives; innovation; creativity
    JEL: J24 J31 M11 O31
    Date: 2013–06–01
  3. By: Pontus Rendahl
    Abstract: This paper studies a model of firm-sponsored investments in general human capital. When institutional settings permit simple contractual arrangements that are consistent with at-will employment, firms invest in a worker's general skills. And when market forces discipline contracts, the equilibrium level of training intimately relates to any match-specific component of surplus, such as mobility costs. If these relation-specific components are sufficiently large, all externalities may be internalized, and training attains the social optimum. In marked contrast to the existing literature, these predictions do not rely on complementarities between training and rents (e.g. “wage-compression"), and they are independent of the distribution of profits and wages.
    Keywords: Human capital; On-the-job training; Contracts and Reputations.
    JEL: D21 J24 J41 M52 M53
    Date: 2013–10–07
  4. By: Jocelyn Donze; Trude Gunnes
    Abstract: This article studies how a firm fosters formal and informal interaction among its employees to create a collective identity and positively influence their effort. We develop an agency model, in which employees have both a personal and a social ideal for effort. The firm does not observe the personal ideals, which gives rise to an adverse selection problem, but can make its workforce more sensitive to the social ideal by allocating part of working hours to social interaction. We show that there are two reasons why the firm invests in social capital. First, it reinforces the effectiveness of monetary incentives. Second, by creating a shared identity in the workforce, the firm is able to reduce the adverse selection problem. We also show that the firm allocates more time to bonding activities when employees have low personal ideals for effort or when they are more heterogeneous as regards these ideals.
    Keywords: agency theory, social interaction, social norms, norm regulation.
    JEL: D2 D8 J3 M5
    Date: 2013
  5. By: Andreas Koch; Daniel Pastuh; Jochen Späth
    Abstract: The present contribution examines whether and how young firms and incumbents differ with regard to selected aspects of work forms and work organization in order to assess their roles for the qualitative changes of work in industrialized countries. Conceptually, we emanate from the approach of negotiated order and we empirically ground our research upon guided interviews conducted with employers and employees in about 50 firms in four distinct industries in Germany. According to our results, new forms of work are particularly widespread in new firms. Most of the young companies in our sample practice autonomous work forms like working on one’s own responsibility and team working more frequently than incumbents, they are more prone to revert to functional flexibility (e.g. changing tasks and duties) and their working time arrangements tend to be more flexible. Altogether, firm age turns out to be an important parameter of new work forms and organization, though it is not the only one. Our results show that also the general and industry-specific framework conditions, a firm’s internal characteristics (e.g. innovation intensity, hierarchies and routines), the relevant actors (management, workforce) and particularly the coaction of these elements are important drivers shaping the overall feature of a firm.
    Keywords: Young firms, Negotiated Order, Quality of Work, Working Time, Autonomy, Work Organization, Germany, Guided Interviews
    JEL: J21 L23 L26
    Date: 2013–10
  6. By: Nathalie Lazaric (GREDEG CNRS); Alain Raybaut (GREDEG CNRS)
    Abstract: In this paper, we explore with a model the potential tensions between the incentive system of groups of inventors and knowledge diversity in a high tech firm. We show that, when all groups are rewarded and able to interact freely with their peers, extrinsic and intrinsic motives are mutually self-reinforcing, leading to crowding in effects. As a result, the level of created knowledge increases in each group, reinforcing the diversity of the firm’s knowledge base. By contrast, competitive rewards and constrained autonomy are likely to produce motivating effects in a small number of groups, limiting knowledge creation to the firm’s core competencies. In this case, the firm can suffer from crowding out effects by the other groups, leading eventually to the extinction of creation in their fields and reduced diversity in the long run. The results are illustrated with empirical findings from a case study of a French high tech firm.
    Keywords: work motivation, groups of inventors, knowledge creation, knowledge diversity
    JEL: O31 O32 L20 D83 J30
    Date: 2013–10
  7. By: Mark Huggett (Georgetown University); Greg Kaplan (Princeton University)
    Abstract: This paper posits a notion of the value of an individual's human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We find that (1) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (2) mean human capital returns exceed stock returns early in life and decline with age, (3) the stock component of the value of human capital is smaller than the bond component at all ages and (4) human capital returns and stock returns have a small positive correlation over the working lifetime.
    Keywords: Value of Human Capital, Return on Human Capital, Idiosyncratic and Aggregate Risk, Incomplete Markets, Heterogeneous Agents
    JEL: D91 E21 G12 J24
    Date: 2013–07
  8. By: Benoît Chalvignac
    Abstract: In this paper we extend the gift-exchange game setting to include a new experimental treatment where subjects are paired with the same partner for the whole game. We observe that the matching mode is more critical to cooperation levels than the contractual arrangement, and that trust-based contracts outperform incentive-based contracts when interaction is repeated within the same pair. In the partner setting, individual preferences seem only to be second-order determinants of cooperation levels and most subjects are highly responsive to others' cooperative choices. Our findings help explain the cooperation dynamics required for organizations to leverage their incentive structure and to endure.
    Keywords: Gift-exchange game; Trust; Cooperation; Informal organization.
    JEL: D2 D7 M2
    Date: 2013
  9. By: Poot, Jacques (University of Waikato); Roskruge, Matthew (University of Waikato)
    Abstract: The education services provided in any given country increasingly contribute to human capital that is employed in another country. On the one hand, graduates may seek to obtain the highest return to the knowledge they gained in their home country by working abroad. On the other hand, some students purchase educational services abroad and will subsequently work abroad, or return home to utilize the internationally acquired knowledge in the domestic labour market. In this paper we use data from the 2006-07 Adult Literacy and Life Skills survey in New Zealand to examine how years of foreign and domestic education affect earnings in the labour market. We account for differences in innate ability by aggregating subjective responses to pertinent questions in the survey and by incorporating parents' educational background. Our findings reconfirm the extensive evidence that education gained in a country of birth has generally a lower return in a foreign labour market than the native born receive in this labour market for the equivalent education. Post-settlement education in the host country has a higher return for migrants than for comparable native born. We also find that the highest returns are obtained among those who, after studying abroad, return home to work – a fact for which there has been to date scarce evidence. Thus, exposure to foreign education can lead to a triple gain: for the country where the education is obtained, for the students' home country and for the students themselves.
    Keywords: international education, human capital, earnings, selection effects
    JEL: F22 I24 J24 J31
    Date: 2013–10
  10. By: Stoyanov, Andrey (York University, Canada); Zubanov, Nikolay (Goethe University Frankfurt)
    Abstract: We estimate how much of the gains from productivity spillovers through worker mobility is retained by the hiring firms, by the workers who bring spillovers, and by the other workers. Using linked employer-employee data from Danish manufacturing for the period 1995-2007, we find that at least two-thirds of the total output gain of 0.11% per year is netted by the firms, while the workers who bring spillovers receive at most 6% of it as the wage premium. The large share retained by the firms implies that spillovers through worker mobility are mostly a positive externality to them.
    Keywords: productivity spillovers, worker mobility, wages, matched employer-employee data
    JEL: D24 J31 J60
    Date: 2013–10
  11. By: Ragasa, Catherine; Ulimwengu, John M.; Randriamamonjy, Josee; Badibanga, Thaddée
    Abstract: This paper provides an in-depth review of the agricultural extension system of DRC including an analysis of its policies and legal framework, organization, and management; links to critical institutions; and capacity and incentive of different actors in the system. This review involved document analyses, interviews with key informants, and surveys of 107 extension organizations and 162 extension agents in 156 randomly selected villages in western DRC. This review suggests serious funding constraints, human resource management problems, no linkage and coordination within the extension system and with research and education systems, and a majority of underserved communities and farmers. This review also highlights a good opportunity given the huge human resources (more than 11,000 agents) deployed into the sectors and territories as part of the Ministry’s agricultural inspection system.
    Keywords: Agricultural extension services, Capacity building, Incentives, agricultural transformation, Reform, advisory service,
    Date: 2013
  12. By: Fioroni, Tamara; D'Alessandro, Simone
    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
  13. By: Terstiege, Stefan
    Abstract: Should contract design induce an agent to conduct a precontractual investigation even though, in any case, the agent will become fully informed after the signing of the contract? This paper shows that imperfect investigations might be encouraged. The result stands in contrast to previous studies, which focus on perfect investigations. The contrast exists because if precontractual investigation is perfect, the benefits of sequential screening vanish.
    Keywords: Principal agent; information acquisition; sequential screening
    JEL: D82 D83 D86
    Date: 2013–10–22
  14. By: Lechner, Michael (University of St. Gallen); Downward, Paul (Loughborough University)
    Abstract: Based on a unique composite dataset measuring heterogeneous sports participation, labour market outcomes and local facilities provision, this paper examines for the first time the association between different types of sports participation on employment and earnings in England. Clear associations between labour market outcomes and sports participation are established through matching estimation whilst controlling for some important confounding factors. The results suggest a link between different types of sports participation to initial access to employment and then higher income opportunities with ageing. However, these vary between the genders and across sports. Specifically, the results suggest that team sports contribute most to employability, but that this varies by age across genders and that outdoor activities contribute most towards higher incomes.
    Keywords: sports participation, human capital, labour market, matching estimation
    JEL: I12 I18 J24 L83 C21
    Date: 2013–10
  15. By: Olivier Bargain (Aix-Marseille School of Economics); Eliane El Badaoui (Université de Cergy-Pontoise); Prudence Kwenda (University College Dublin); Eric Strobl (Ecole Polytechnique Paris); Frank Walsh (University College Dublin)
    Abstract: We develop a model where workers may enter self-employment or search for jobs as employees and where there is heterogeneity across workers’ managerial ability. Workers with higher skills will manage larger firms while workers with low managerial ability will run smaller firms and will be in self-employment only when they cannot find a salaried job. For these workers self-employment is a secondary/informal form of employment. The Burdett and Mortensen (1998) equilibrium search model is used for illustration as a special case of our more general framework. Empirical evidence from Mexico is provided and demonstrates that firm size wage effects for employees and selfemployed workers are broadly consistent with the model.
    Keywords: Self-employment, Managerial ability, Informal sector
    JEL: J31 O17
    Date: 2013–10–23
  16. By: Monica Billio (Department of Economics, University Of Venice Cà Foscari); Gregory Jannin (Variances and University Paris I); Bertrand Maillet (University La Reunion and University of Orléans); Loriana Pelizzon (Department of Economics, University of Venice Ca’ Foscari)
    Abstract: Most of the performance measures proposed in the financial and academic literature are subject to be gamed in an active management framework (Goetzmann et al., 2007). One of the main reasons of this drawback is due to an incomplete characterization by these measures of studied return distributions. We introduce a new flexible Generalized Utility-based N-moment measure of performance (GUN, in short), characterizing the whole return distribution, and thus hardly gamable. More precisely, it takes into account the first four moments of the return distribution and the associated sensitivities of the studied agent, reflecting his preferences and risk profile. The new performance measure is also well adapted for analyzing performance of hedge funds and more peculiarly in presence of derivative instruments associated with non-Gaussian return distributions. Length: 34
    Keywords: C16, G11, G23, G24
    Date: 2013
  17. By: Diedrich, Andreas (Gothenburg Research Institute); Eriksson-Zetterquist, Ulla (Gothenburg Research Institute); Ewertsson, Lena (Gothenburg Research Institute); Hagberg, Johan (Företagsekonomiska institutionen); Hallin, Anette (Företagsekonomiska institutionen, Stockholms universitet); Lavén, Fredrik (Företagsekonomiska institutionen); Lindberg, Kajsa (Företagsekonomiska institutionen); Raviola, Elena (Gothenburg Research Institute); Rindzeviciute, Egle (Gothenburg Research Institute); Walter, Lars (Företagsekonomiska institutionen)
    Abstract: One of the contemporary “turns” in management studies is the “performativity” turn. In this paper, we present a genealogy of the concept of performativity as it has been used in management and organization studies (MOS). Starting with the work of Austin, Bateson, Goffman and Lyotard, we move on to more recent debates surrounding the use of the concept by Butler and the STS researchers Callon, Latour and Law, as well as how their ideas have been further translated within MOS. The focus is on how the concept is defined and on the areas of study where performativity has been used. Taken together, the approach to performativity employed has implications for how the concept is understood and translated. Finally, we discuss the particular ontological position of the performative perspective, and its methodological consequences.
    Keywords: performativity; management studies; management and organizations studies; STS
    Date: 2013–10–23

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