nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒05‒04
nineteen papers chosen by
Tommaso Reggiani
University of Cologne

  1. Awards are a Special Kind of Signal By Bruno S. Frey; Jana Gallus
  2. La Meglio Gioventù: Earnings Gaps across Generations and Skills in Italy By Naticchioni, Paolo; Raitano, Michele; Vittori, Claudia
  3. The New Empirical Economics of Management By Nicholas Bloom; Renata Lemos; Raffaella Sadun; Daniela Scur; John Van Reenen
  4. Dynamic Education Signaling with Dropout Risk, Third Version By Francesc Dilme; Fei Li
  5. Gender differences in shirking: monitoring or social preferences? Evidence from a field experiment By Johansson, Per; Karimi, Arizo; Nilsson, Peter
  6. Is working from home good or bad work? Evidence from Australian employees By Alfred Michael Dockery; Sherry Bawa
  7. Deception in Networks: A Laboratory Study By Rong Rong; Daniel Houser
  8. Gender and the Labor Market: What Have We Learned from Field and Lab Experiments? By Azmat, Ghazala; Petrongolo, Barbara
  9. The Role of Education for the Economic Growth of Bulgaria By Neycheva, Mariya
  10. Work incentives and decisions to remain in paid work in Australia By Rachel Ong; Gavin Wood; Melek Cigdem
  11. The Biocultural Origins of Human Capital Formation By Galor, Oded; Klemp, Marc
  12. Absenteeism in Apprenticeships: What Role Do Works Councils Play? By Harald Pfeifer
  13. The Impact of Education on Personality: Evidence from a German High School Reform By Dahmann, Sarah; Anger, Silke
  14. Schooling attainment, schooling expenditures, and test scores what causes economic growth? By Theodore R. Breton
  15. The Productivity of Working Hours By Pencavel, John
  16. "The Dust was Long in Settling": Human Capital and the Lasting Impact of the American Dust Bowl By Vellore Arthi
  17. A Field Study of Chinese Migrant Workers' Attitudes Toward Risks, Strategic Uncertainty, and Competitiveness By Li Hao; Daniel Houser; Lei Mao; Marie Claire Villeval
  18. Income Inequality, TFP, and Human Capital By Sequeira, Tiago; Santos, Marcelo; Ferreira-Lopes, Alexandra
  19. Schooling and Economic Growth: What Have We Learned? By Theodore R. Breton

  1. By: Bruno S. Frey; Jana Gallus
    Abstract: Awards appear in various forms, ranging from the title "Employee of the Month" to prizes, decorations, and other honors. This contribution develops a theory designed to analyze the widely-observed phenomenon of award giving. We use signaling theory as a basis for our discussion. The perspectives of the giver, and of (potential) recipients, of awards are studied in a principal-agent framework. The analysis highlights conditions under which signaling failures are likely to arise and compares awards with monetary compensation. The paper informs management practice by presenting a systematic appraisal of the signaling functions of awards. It proposes under which conditions awards tend to raise performance, and when monetary compensation proves to be superior.
    Keywords: Awards; prizes; incentives; signaling theory; principal-agent framework
    Date: 2014–02
  2. By: Naticchioni, Paolo (University of Rome 3); Raitano, Michele (Sapienza University of Rome); Vittori, Claudia (Sapienza University of Rome)
    Abstract: This paper documents the evolution of the experience-earnings profiles of private employees in Italy over the first six years of working career across three birth cohorts (1965-1969, 1970- 1974, 1975-1979). We explore the average trends and disentangle how the patterns vary according to individual skills, defined in terms of both educational levels and percentiles of the unconditional earnings distribution. Unlike previous studies, and in contrast with the expectations prompted by the skill-biased literature, our results surprisingly show that the Italian "best of youth", i.e. the best workers of the most recent cohorts (the high skilled), have suffered, compared to the previous cohorts, an earnings penalty much more severe than that experienced by unskilled workers. This finding also raises questions about the effectiveness of the European Employment Strategy, which repeatedly stressed the importance of human capital and technological knowledge as main drivers for European performance.
    Keywords: youth, cohorts, education, earnings, Italy
    JEL: J24 J31
    Date: 2014–04
  3. By: Nicholas Bloom; Renata Lemos; Raffaella Sadun; Daniela Scur; John Van Reenen
    Abstract: Over the last decade the World Management Survey (WMS) has collected firm-level management practices data across multiple sectors and countries. We developed the survey to try to explain the large and persistent TFP differences across firms and countries. This review paper discusses what has been learned empirically and theoretically from the WMS and other recent work on management practices. Our preliminary results suggest that about a quarter of cross-country and within-country TFP gaps can be accounted for by management practices. Management seems to matter both qualitatively and quantitatively. Competition, governance, human capital and informational frictions help account for the variation in management. We make some suggestions for both policy and future research.
    Keywords: Management, organization, productivity
    JEL: L2 M2 O14 O32 O33
    Date: 2014–04
  4. By: Francesc Dilme (Department of Economics, University of Bonn); Fei Li (Department of Economics, University of North Carolina, Chapel Hill)
    Abstract: This paper analyzes a dynamic education signaling model with dropout risk. Workers pay an education cost per unit of time and face an exogenous dropout risk before graduation. Since low-productivity workers’ cost of education is high, pooling with early dropouts helps them avoid a high education cost. In equilibrium, low-productivity workers choose to endoge- nously drop out over time, so the productivity of workers in college increases as the education process progresses. We find that the exogenous dropout risk generates rich dynamics in the endogenous dropout behavior of workers, and the maximum education length is decreasing in the prior about a worker being highly productive. We also extend the baseline model by allowing human capital accumulation.
    Keywords: Dynamic Games, Dynamic Signaling, Dropout
    JEL: D83 J31
    Date: 2013–09–03
  5. By: Johansson, Per (IFAU - Institute for Evaluation of Labour Market and Education Policy); Karimi, Arizo (IFAU - Institute for Evaluation of Labour Market and Education Policy); Nilsson, Peter (Institute for International Economic Studies (IIES), Stockholm University)
    Abstract: This paper studies gender differences in the extent to which social preferences affect workers' shirking decisions. Using exogenous variation in work absence induced by a randomized field experiment that increased treated workers' absence, we find that also non-treated workers increased their absence as a response. Furthermore, we find that male workers react more strongly to decreased monitoring, but no significant gender difference in the extent to which workers are influenced by peers. However, our results suggest significant heterogeneity in the degree of influence that male and female workers exert on each other: conditional on the potential exposure to same-sex co-workers, men are only affected by their male peers, and women are only affected by their female peers.
    Keywords: Peer effects; employer-employee data; work absence; randomized field experiment
    JEL: C23 C93 J24
    Date: 2014–04–15
  6. By: Alfred Michael Dockery (Bankwest Curtin Economics Centre, Curtin Business School); Sherry Bawa (School of Economics and Finance, Curtin Business School)
    Abstract: There is concern that workers are finding it increasingly difficult to balance work and family life and face growing time stress. Working from home is one form of flexibility in working arrangements that may assist workers to juggle work and non-work commitments. However, it may also provide a pathway for greater intrusion of work into family life and for added work-related stress. Around 17% of Australian employees work some of their usual working hours from home, and one-third of these do so under a formal agreement with their employer. Based on evidence from the Household, Income and Labour Dynamics in Australia Survey, these proportions seem to have remained surprisingly stable over the past decade. Overall, the ability to work some hours from home is seen by employees as a positive job attribute that provides flexibility to balance work and non-work commitments and this is particularly so for employees who have a formal agreement to work from home. However, working from home is also associated with long hours of work and the evidence provides grounds for concern that working from home does facilitate greater intrusion into non-work domains of life through this channel.
    Keywords: time allocation, labour supply, working conditions, job satisfaction.
    JEL: J13 J22 I32
    Date: 2014–04
  7. By: Rong Rong (Department of Economics, Weber State University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University)
    Abstract: Communication between departments within a firm may include deception. Theory suggests that telling lies in these environments may be strategically optimal if there exists a small difference in monetary incentives (Crawford and Sobel, 1982; Galeotti et al, 2012). We design a laboratory experiment to investigate whether agents with different monetary incentives in a network environment behave according to theoretical predictions. We found that players’ choices are consistent with the theory. That is, most communication within an incentive group is truthful and deception often occurs between subjects from different groups. These results have important implications for intra-organizational conflict management, demonstrating that in order to minimize deceptive communication between departments the firm may need to reduce incentive differences between these groups. Length: 19
    Keywords: social networks, deception, strategic information transmission, experiments
    JEL: D85 D02 C92
    Date: 2014–04
  8. By: Azmat, Ghazala (Queen Mary, University of London); Petrongolo, Barbara (Queen Mary, University of London)
    Abstract: We discuss the contribution of the experimental literature to the understanding of both traditional and previously unexplored dimensions of gender differences and discuss their bearings on labor market outcomes. Experiments have offered new findings on gender discrimination, and while they have identified a bias against hiring women in some labor market segments, the discrimination detected in field experiments is less pervasive than that implied by the regression approach. Experiments have also offered new insights into gender differences in preferences: women appear to gain less from negotiation, have lower preferences than men for risk and competition, and may be more sensitive to social cues. These gender differences in preferences also have implications in group settings, whereby the gender composition of a group affects team decisions and performance. Most of the evidence on gender traits comes from the lab, and key open questions remain as to the source of gender preferences – nature versus nurture, or their interaction – and their role, if any, in the workplace.
    Keywords: gender, field experiments, lab experiments, discrimination, gender preferences
    JEL: J16 J24 J71 C91 C92 C93
    Date: 2014–04
  9. By: Neycheva, Mariya
    Abstract: The paper presents results of a study which estimates the impact of human capital on growth in Bulgaria over the period 2000-12. The empirical models are based on the extended Cobb-Douglas production with three inputs ─ labor, physical capital and human capital. Export and Foreign Direct Investments (FDI) are included as well. The quantity of human capital is measured by the share of people in the labor force aged 25-64 having completed at least upper secondary education. The outcome suggests that the share of people with upper secondary education enters insignificantly the regression model. Moreover, its short-run accumulation is related negatively to real output per capita. When tertiary education is considered, the result is positive and statistically significant. In general, the study cannot fully support the hypothesis that education fosters growth because people with upper secondary education twice outnumber those with tertiary education. The results also imply that the upward trend of real output is attributed mainly to FDI, physical capital accumulation and export. A reasonable explanation of the non-significant role of secondary education is that the quality of human capital is a crucial factor for growth especially in countries where the average educational level is relatively high. According to the results of a partial correlation analysis foreign language proficiency explains a large part of the variation in output per capita across Europe.
    Keywords: Human capital, Higher Education, Secondary Education, Growth, Foreign language proficiency, Bulgaria
    JEL: H52 J24 O40
    Date: 2014–04
  10. By: Rachel Ong (School of Economics and Finance, Curtin University); Gavin Wood (School of Global, Urban and Social Studies, RMIT University); Melek Cigdem (School of Global, Urban and Social Studies, RMIT University)
    Date: 2013–12
  11. By: Galor, Oded; Klemp, Marc
    Abstract: This research explores the biocultural origins of human capital formation. It presents the first evidence that moderate fecundity was conducive for long-run reproductive success within the human species. Exploiting an extensive genealogy record for nearly half a million individuals in Quebec during the seventeenth and eighteenth centuries, the study traces the number of descendants of early inhabitants in the subsequent four generations. Using the time interval between the date of marriage and the first live birth as a measure of reproductive capacity, the research establishes that while a higher fecundity is associated with a larger number of children, an intermediate level maximizes long-run reproductive success. The finding further indicates that the optimal level of fecundity was below the population median, suggesting that the forces of natural selection favored individuals with a lower level of fecundity. The research lends credence to the hypothesis that during the Malthusian epoch, natural selection favored individuals with a larger predisposition towards child quality, contributing to human capital formation, the onset of the demographic transition and the evolution of societies from an epoch of stagnation to sustained economic growth.
    Keywords: Demography, Evolution, Human Capital Formation, Natural Selection, Fecundity, Quantity-Quality Trade-Off, Long-Run Reproductive Success
    JEL: J10 O10
    Date: 2014–04–29
  12. By: Harald Pfeifer (Federal Institute for Vocational Education and Training (BIBB) Bonn, Research Centre for Education and the Labour Market (ROA) Maastricht)
    Abstract: This paper examines the influence of works councils on apprenticesÕ absence from the workplace in Germany. The analysis draws on merged administrative and survey data, including information on the cumulated days apprentices are absent from work due to sickness. On average, apprentices are absent nine working days per year, whereas strong differences exist with respect to the training occupation and several firm characteristics. Regression results imply that the presence of a works council in a firm significantly reduces apprenticesÕ absence. This result supports the hypothesis that works councils effectively exercise their legally anchored ÔvoiceÕ function in the German apprenticeship system.
    Keywords: Absenteeism, Apprenticeship Training, Works Councils
    JEL: J24 J52 K31
    Date: 2014–04
  13. By: Dahmann, Sarah (DIW Berlin); Anger, Silke (Institute for Employment Research (IAB), Nuremberg)
    Abstract: This paper investigates the short-term effects of a reduction in the length of high school on students' personality traits using a school reform carried out at the state level in Germany as a quasi-natural experiment. Starting in 2001, academic-track high school (Gymnasium) was reduced from nine to eight years in most of Germany's federal states, leaving the overall curriculum unchanged. This enabled students to obtain a university entrance qualification (Abitur) after a total of only 12 rather than 13 years of schooling. We exploit the variation in the length of academic-track high school over time and across states to identify the effect of schooling on students' Big Five personality traits and on their locus of control. Using rich data on adolescents and young adults from the German Socio-Economic Panel (SOEP) study, our estimates show that shortening high school caused students on average to be more extroverted and less emotionally stable. Our estimates point to important heterogeneous effects. In addition to differences between East and West Germany, we find that male students and students from disrupted families showed stronger personality changes following the reform: they became more agreeable and more extroverted, respectively. We conclude that the educational system plays an important role in shaping adolescents' personality traits.
    Keywords: non-cognitive skills, Big Five, locus of control, skill formation, high school reform
    JEL: I21 I28 J24
    Date: 2014–04
  14. By: Theodore R. Breton
    Abstract: Using a dynamic augmented Solow model, I estimate the effect of students’ schooling attainment, schooling expenditures, and students’ test scores on growth rates over the period 1985-2005. I also estimate the effect of related measures for human capital stocks on national income in a static model in 2005. Individually all of the measures cause growth, and when included in the same model, more than one is statistically significant. Relative measurement error appears to determine which measure provides the best results. The results support the importance of increases in human capital for growth and the validity of the augmented Solow model.
    Keywords: Schooling Attainment; Schooling Expenditures; Test Scores; Economic Growth
    JEL: O41 I25
    Date: 2013–05–09
  15. By: Pencavel, John (Stanford University)
    Abstract: Observations on munition workers, most of them women, are organized to examine the relationship between their output and their working hours. The relationship is nonlinear: below an hours threshold, output is proportional to hours; above a threshold, output rises at a decreasing rate as hours increase. Implications of these results for the estimation of labor supply functions are taken up. The findings also link up with current research on the effects of long working hours on accidents and injuries.
    Keywords: working hours, output, productivity, women workers
    JEL: J24 J22 N34
    Date: 2014–04
  16. By: Vellore Arthi
    Abstract: �I use variation in childhood exposure to the Dust Bowl, an environmental shock to health and income, as a natural experiment to explain variation in adult human capital.� I find that the Dust Bowl produced significant adverse impacts in later life, especially when exposure was in utero, increasing rates of poverty and disability, and decreasing rates of fertility and college completion.� Dependence on agriculture exacerbates these effects, suggesting that the Dust Bowl was most damaging via the destruction of farming livelihoods.� This collapse of farm incomes, however, had the positive effect of reducing demand for child farm labor and thus decreasing the opportunity costs of secondary schooling, as evidence by increases in high school completion amongst the exposed.
    Keywords: Dust Bowl, environmental shock, human capital formation, early life health
    Date: 2014–04–30
  17. By: Li Hao (Sam M. Walton College of Business, University of Arkansas, Fayetteville); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Lei Mao (Groupe d’Analyse et de Théorie Economique, UniversiteÌ de Lyon); Marie Claire Villeval (Groupe d’Analyse et de Théorie Economique, UniversiteÌ de Lyon)
    Abstract: Using a field experiment in China, we study whether migration status is correlated with attitudes toward risk, ambiguity, and competitiveness. Our subjects include migrants and non-migrants. We find that, migrants exhibit no differences from non-migrants in risk and ambiguity preferences elicited using pairs of lotteries; however, migrants are significantly more likely to enter competition in the presence of strategic uncertainty when they expect competitive entries from others. Our results suggest that migration may be driven more by a stronger belief in one’s ability to succeed in an uncertain and competitive environment than by risk attitudes under state uncertainty. Length: 46
    Keywords: migration, risk preferences, strategic uncertainty, ambiguity, field experiment
    JEL: C93 D03 D63 J61
    Date: 2014–04
  18. By: Sequeira, Tiago; Santos, Marcelo; Ferreira-Lopes, Alexandra
    Abstract: A fruitful recent theoretical literature has related human capital and technological development with income (and wages) inequality. However, empirical assessments on the relationship are still scarce. We relate human capital and total factor productivity (TFP) with inequality and discover that, when countries are assumed as heterogeneous and dependent cross-sections, human capital is the most robust determinant of inequality, contributing to increase inequality, as predicted by theory. There is evidence of great heterogeneity on the effects of TFP and Openness across countries. These new empirical results open a wide avenue for theoretical research on the country-specific features conditioning the causal relationship from human capital, technology and trade to inequality.
    Keywords: income inequality, human capital, technology
    JEL: I24 I32 O10 O33 O50
    Date: 2014–03–29
  19. By: Theodore R. Breton
    Abstract: This paper explains why different studies present widely-varying estimates of the effect of increased schooling on national income. It shows that when correctly-interpreted, these studies support the hypothesis that a one-year increase in average schooling attainment raises national income directly by about 10% and indirectly by about 19%. The increases in national income are larger than the aggregate effect of higher workers’ salaries, because schooling has external effects on national income. Due to the rising cost of additional years of schooling, the national return on investment in schooling is much lower in more educated countries. The estimated real national return on investment in schooling in 2005 ranged from over 40% in the least educated countries to 8.5% in the most educated countries. Average levels of schooling and average test scores at ages 9 to 15 generally rise together, so either measure of human capital can explain differences in national income or growth rates across countries. Since the productivity of physical capital depends on the level of human capital, in a global financial market, the growth in human capital largely determines the growth in physical capital and in national income. ***** Este documento explica por qué diferentes estudios presentan ampliamente diferentes estimaciones sobre el efecto del aumento de la escolarización en la renta nacional. Esto demuestra que cuando se interpreta correctamente, estos estudios apoyan la hipótesis de que un aumento en un año en el nivel medio de escolaridad aumenta el ingreso nacional directamente en un 10% e indirectamente alrededor del 19%. Los aumentos en la renta nacional son más grandes que el efecto agregado de los salarios más altos de los trabajadores, ya que la escolarización tiene efectos externos sobre el ingreso nacional. Debido al creciente costo de los años adicionales de escolaridad, el retorno de la inversión nacional en educación es mucho menor en los países con mayor nivel educativo. El retorno nacional real estimado de la inversión en la educación en 2005 osciló entre el 40% en los países menos educados hasta el 8,5% en los países más cultos. Los niveles promedio de escolaridad y calificaciones de los exámenes a edades promedio de 9 a 15 generalmente aumentan en conjunto, así que o medida de capital humano pueden explicar las diferencias en el ingreso nacional o las tasas de crecimiento entre los países. Dado que la productividad del capital físico depende del nivel de capital humano, en un mercado financiero global, el crecimiento en capital humano determina en gran medida el crecimiento en capital físico y en el ingreso nacional.
    Keywords: Schooling; Human Capital; Test Scores; Economic Growth
    JEL: O41 I25
    Date: 2014–04–07

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