nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒02‒08
eleven papers chosen by
Tommaso Reggiani
University of Cologne

  1. Explaining the Association between Monitoring and Controversial CEO Pay Practices: an Optimal Contracting Perspective By Pierre Chaigneau; Nicolas Sahuguet
  2. Job Satisfaction and Public Service Motivation By Kaiser, Lutz C.
  3. Organizational Structure and Firms' Demand for HRM Practices By Eriksson, Tor; Ortega, Jaime
  4. Personnel economics issues: What causes increasing work intensity, and what are the policy responses? By Josheski, Dushko
  5. Do Overconfident Workers Cooperate Less? The Relationship between Overconfidence and Cooperation in Team Production By Vanessa Mertins; Wolfgang Hoffeld
  6. Personnel Economics essay: Issues in Human Capital Theory, training and earnings of workers By Josheski, Dushko
  7. War and the Destruction of Human Capital By Jorge M. Agüero; Muhammad Farhan Majid
  8. Performance related pay, productivity and wages in Italy: a quantile regression approach By Damiani, Mirella; Pompei, Fabrizio; Ricci, Andrea
  9. Family employees and absenteeism By Laszlo Goerke; Jörn Block; Jose Maria Millan; Concepcion Roman
  10. Essential themes in Personnel economics By Josheski, Dushko
  11. Parental Response to Early Human Capital Shocks: Evidence from the Chernobyl Accident By Martin Halla; Martina Zweimüller

  1. By: Pierre Chaigneau; Nicolas Sahuguet
    Abstract: Puzzling associations between low levels of ownership concentration and CEO pay practices such as pay-for-luck, a low pay-performance sensitivity, a more asymmetric pay-performance relation, and high salaries, have been documented. They have been interpreted as evidence that CEO pay is not set optimally. We explain these associations in a model in which firms design contracts optimally to attract and retain CEOs. The results are driven by the matching process: firms with greater ownership concentration have a higher monitoring capacity, and can better handle the downside risk of hiring CEOs with more uncertain ability. The outside option of these CEOs is more sensitive to their performance net of luck, which generates a higher pay-performance sensitivity and less pay-for-luck. If managerial skills are sufficiently transferable across firms and the cost of CEO dismissal is sufficiently high, these CEOs are less valuable and therefore receive relatively lower salaries.
    Keywords: CEO pay, corporate governance, monitoring, pay-for-luck
    JEL: D86 G34 M12
    Date: 2014
  2. By: Kaiser, Lutz C. (North Rhine-Westphalia University of Applied Sciences)
    Abstract: Based on a unique case study-dataset, the paper analyses job satisfaction and public service motivation in Germany. A special issue of the investigation is related to the evaluation of performance pay scales that were introduced some years ago to German public employees within the frame of fostering New Public Management. The findings display a general dominance of intrinsic motivators. Additionally, this kind of motivators plays an important role with regard to building up and keeping job satisfaction in the public sector. Further results display the transferability of competences, autonomy, regular appraisal interviews and productivity feedback as factors incorporating a positive significance in terms of job satisfaction.
    Keywords: job satisfaction, public service motivation, performance pay scales, HR-management
    JEL: J28 J45
    Date: 2014–01
  3. By: Eriksson, Tor; Ortega, Jaime
    Abstract: A question largely left unanswered in previous studies of firms’ use of HRM practices, and the consequences thereof, is why some firms adopt these practices while others do not. We examine empirically the determinants of firms’ demand for HRM pay, work and training practices with a special focus on the role of differences in the organizational structure of firms. For this purpose we merge data from a detailed questionnaire study of Danish private sector firms’ use of HRM practices with workforce information from linked employer-employee data. We find that firms with a Multi-divisional or a Hybrid structure have a greater demand for (incentive) pay practices and new work practices than companies with a Unitary (functional) form. Moreover, M- and H-firms train more of their employees than the U-firms do, suggesting that employer provided training is linked to the adoption of pay and work practices.
    Keywords: Organizational structure, Firm choice, Pay and work practices
    JEL: D22 L22 M51 M52
    Date: 2014–01
  4. By: Josheski, Dushko
    Abstract: In this paper the issue from personnel economics such as work intensity has been investigated. George Akerlof back in 1976 argued that the real life failed to correspond to the standard general equilibrium model set by Arrow-Debreu. In the real life information is neither complete nor it’s costless. In real life workers tend to work in harsh conditions, and put more efforts in order to receive better wages, also they have incentives to educate themselves more, as better educated employees are more productive. More productive means that they work faster as the rat’s race to the cheese and faster rats will get to the cheese first and get more cheese than slower rats. In reality workers do not want to share their output with slower workers. But it is because of bad norms that firms sets or taxes that government imposes that workers tend to work suboptimal i.e. work more than what is required in equilibrium, or work less than the equilibrium socially optimal required effort. The problem also arises when firms compare worker and pick ‘’average’’ worker, nowadays in OECD (rich) countries club, workers tend to get paid more and get spurious data on increased productivity and the measure average effort to be biased, so wage function will then be biased w=w (ē, t), wage is function of average effort and time needed to produce output.
    Keywords: Rat race equilibrium, labour market regulation policies, job satisfaction, workers performance
    JEL: M50 M51
    Date: 2014–02
  5. By: Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Wolfgang Hoffeld (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: The tendency to underestimate others’ relative performance compared to one’s own is widespread among individuals in all work environments. We examine the relationship between, and the driving forces behind, individual overconfidence and voluntary cooperation in team production. Our experimental data suggest an indirect and gender-specific link: Overconfident men hold more optimistic beliefs about coworkers’ cooperativeness than men who lack confidence, and are accordingly significantly more cooperative, whereas overconfidence, beliefs, and cooperativeness are not correlated in women.
    Keywords: team production, public good, experiment, real effort, cooperation, gender, overconfidence, belief
    JEL: M52 J33 J16 J24 C91
    Date: 2013–12
  6. By: Josheski, Dushko
    Abstract: In this paper the issues from the personnel economics has been investigated. The issues such as training of workers from Becker’s human capital theory and their association with the workers’ productivity. In the second part of the paper the issue of grooming has been investigated in relation with earnings for which there exist and it is presented empirical evidence. In the equation as regressors are also present Mincerian variables: age, marital status and others. Also the four puzzles in the empirical literature about the determinants of earnings has been investigated. And how the empirical literature helps in resolving them.
    Keywords: Personnel economics, training, earnings, grooming
    JEL: M50 M52 M53
    Date: 2014–01–31
  7. By: Jorge M. Agüero (University of Connecticut); Muhammad Farhan Majid (University of Pennsylvania)
    Abstract: The identification of the effect of wars on human capital tends to focus on the population of school age children at the time of the conflict. Our paper introduces a methodology to estimate the effect of war on the stock of human capital by examining the changes in the presence of educated people after the Rwanda genocide. We find that the genocide reduced the stock of human capital in Rwanda severely. The before-and-after results show that highly educated individuals (i.e., those with primary education or more) are “missing” at a rate that is 19.4% higher than the less educated. Moreover, Rwanda's average years of schooling is lower by 0.37 years. When comparisons with Uganda are made, these estimates more than double suggesting that, if anything, the previous finding were biased downwards. Interestingly, when the cross-sectional variation within Rwanda variation in intensity of genocide is exploited there is no evidence of statistically significant differences. This suggests that the losses in the stock of human capital due to the Rwandan genocide were aggregate in nature.
    Keywords: Civil war, Mortality, Education, Human capital, Education, Genocide, Africa
    Date: 2014–01
  8. By: Damiani, Mirella; Pompei, Fabrizio; Ricci, Andrea
    Abstract: The authors analyzed the role of Performance Related Pay (PRP) in a sample of Italian manufacturing and service firms and presented standard quantile estimates to investigate heterogeneity in pay-performance impacts on labor productivity and wages. In a second stage, the endogeneity of PRP was taken into account by using instrumental variable quantile regression techniques. They find considerable heterogeneity across the distribution of labor productivity and wages, with the highest role of PRP obtained at the lowest and highest quantiles. However, for all quantiles, the comparison of productivity and wage estimates suggests that PRP might not only be rent-sharing devices, but also incentive schemes that substantially lead to efficiency enhancements. These findings are confirmed for firms under union governance and suggest that well designed policies, that circumvent the limited implementation of PRP practices, would guarantee productivity improvement.
    Keywords: Efficiency, Wages, Performance–related pay, unions
    JEL: D24 J31 J33 J51
    Date: 2014–01–30
  9. By: Laszlo Goerke (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Jörn Block (University of Trier, Erasmus Institute of Management, Erasmus University Rotterdam); Jose Maria Millan (Department of Economics, Universidad de Huelva); Concepcion Roman (Department of Economics, Universidad de Huelva)
    Abstract: Work effort varies greatly across employees, as evidenced by substantial differences in absence rates. Moreover, absenteeism causes sizeable output losses. Using data from the European Community Household Panel (ECHP), this paper investigates absence behavior of family employees, i.e. workers who are employed in enterprises owned by a relative. Our estimates indicate that being a family employee instead of a regular employee in the private sector significantly reduces both the probability and duration of absence to a substantial degree.
    Keywords: absenteeism, family employees, European Community Household Panel, work effort
    JEL: I10 J22 M50
    Date: 2014–02
  10. By: Josheski, Dushko
    Abstract: In this paper are presented essential themes in the subject of personnel economics. In the first part analysis has been conducted on the impact of peer pressure on workplace behaviour. Then again models for compensation structures within firms, and their influence on the utility of work by employees. In the final section of the paper the productivity spillover effect has been analyzed, and the causes of existence of spillovers and their impact on workers’ productivity
    Keywords: Personnel economics, compensation structures, peer pressure, spillover effect
    JEL: M52 M55
    Date: 2014–02
  11. By: Martin Halla; Martina Zweimüller
    Abstract: Little is known about the response behavior of parents whose children are exposed to an early-life shock. In this paper we interpret the prenatal exposure of the Austrian 1986 cohort to radioactive fallout from the Chernobyl accident as a negative human capital shock and examine their parents’ response behavior. To identify causal effects we can rely on exogenous variation in the exposure to radioactive fallout (over time and) between communities due to geographic differences in precipitation at the time of the accident. We find robust empirical evidence of compensating investment behavior by parents in response to the shock. Families with low socioeconomic status reduced their family size, while families with higher socioeconomic status responded with reduced maternal labor supply. Compensating investment made by the latter group seems relatively more effective because we do not find any detrimental long-term effects for exposed children from higher socioeconomic backgrounds. In contrast, exposed children from low socioeconomic backgrounds have significantly worse labor market outcomes as young adults.
    Keywords: Fetal origins, parental response, Chernobyl, radiation, health, culling, human capital, fertility, labor supply
    JEL: I18 I20 Q48 Q53 J24
    Date: 2014–01

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