nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒05‒17
seventeen papers chosen by
Tommaso Reggiani
University of Cologne

  1. An Experimental Examination of Compensation Schemes and Level of Effort in Differentiated Tasks By Hiromasa Takahashi; Junyi Shen; Kazuhito Ogawa
  2. The Performance Pay Premium By Dr Alex Bryson; Lucy Stokes; John Forth
  3. Does the unemployment benefit institution affect the productivity of workers? Evidence from a field experiment By Mariana Blanco; Juan Fernando Vargas; Patricio S. Dalton
  4. Human Resource Management: how much do firms really need? By Dr Alex Bryson
  5. International Migration of Skilled Workers with Endogenous Policies By Slobodan Djajić; Michael S. Michael
  6. Human well-being and in-work benefits: a randomized controlled trial By Dr Richard Dorsett
  7. In brief: Management in America By Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
  8. Informal economy in Africa: Building human capital to set the Gazelles free By M. Arouri; A. Bwn Youssef; Ceyhun Elgin
  9. Workers' Participation in Wage Setting and Opportunistic Behavior: Evidence from a Gift-Exchange Experiment By Vanessa Mertins; Jörg Franke; Ruslan Gurtoviy
  10. Minimum Wages and Relational Contracts By Fahn, Matthias
  11. The New Empirical Economics of Management By Nicholas Bloom; Renata Lemos; Raffaella Sadun; Daniela Scur; John Van Reenen
  12. Managerial Turnover: Coach Dismissals and Team Performance in Colombia By Andres Giraldo; Juan Mendoza; Andrés Rosas; Dayana Tellez
  13. Capacity development for the transformation of Africa By Leautier, Frannie A.
  14. Parental Response to Early Human Capital Shocks: Evidence from the Chernobyl Accident By Sylvia Frühwirth-Schnatter; Martin Halla; Alexandra Posekany; Gerald J. Pruckner; Thomas Schober
  15. Expectations as Reference Points: Field Evidence from Professional Soccer By Bjoern Bartling; Leif Brandes; Daniel Schunk
  16. Human capital, firm capabilities and productivity growth By Ilke Van Beveren; Stijn Vanormelingen
  17. Gender and the labour market: evidence from experiments By Ghazala Azmat; Barbara Petrongolo

  1. By: Hiromasa Takahashi (Faculty of International Studies, Hiroshima City University, Japan); Junyi Shen (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Kazuhito Ogawa (Faculty of Sociology, Kansai University, Japan)
    Abstract: We examine the influence of different compensation schemes on exertion of effort for differentiated tasks. The first type of task is assumed to be boring and has no intrinsic motivation, while the second is assumed to be interesting, and has a higher intrinsic motivation. The results are as follows: (1) in the first task, standard economic theory, which claims higher pay should result in higher effort, does not hold. (2) Standard economic theory holds for the second task, which predicts that the higher the incentive, the more effort one exerts, and achieves a higher performance on average.
    Keywords: Real effort experiment, Intrinsic motivation, Loss aversion, Fixed pay, Incentive pay
    JEL: M52 J33
    Date: 2014–05
  2. By: Dr Alex Bryson; Lucy Stokes; John Forth
    Abstract: Using nationally representative linked employer-employee data we find one-quarter of employees in Britain are paid for performance. The log hourly wage gap between performance pay and fixed pay employees is .36 points.� This falls to .15 log points after controlling for observable demographic, job and workplace characteristics. It falls still further to .10 log points when comparing "like" employees in the same workplace, indicating that performance pay contracts are used in higher paying workplaces. The premium rises markedly as one moves up the wage distribution: it is seven times higher at the 90th percentile than it is at the 10th percentile in the wage distribution (.42 log points compared to .06 log points).
    Date: 2014–03
  3. By: Mariana Blanco; Juan Fernando Vargas; Patricio S. Dalton
    Abstract: Abstract: We investigate whether and how the type of unemployment benefit institution affects productivity. We designed a eld experiment to compare workers' productivity under a welfare system, where the unemployed receive an unconditional monetary transfer, with their productivity under a workfare system, where the transfer is received conditional on the unemployed spending some time on ancillary activities. First, we find that having an unemployment benefit institution, regardless of whether it makes transfers conditional or unconditional, increases workers' productivity. Second, we find that productivity is higher under Welfare than under Workfare. Becoming unemployed under Welfare comes at the psychological cost of a drop in self-esteem, presumably due to the shame or stigma associated with receiving an unconditional unemployment benefit. We document the empirical relevance of precisely this channel. The differences we observe in productivity suggest that this psychological cost acts as an extra non monetary incentive for workers under Welfare to put a higher effort in their work.
    Keywords: Unemployment Benets, Workfare, Productivity, Self-esteem, Shame.
    JEL: J24 J65 J45
    Date: 2013–11–04
  4. By: Dr Alex Bryson
    Abstract: Does the introduction of ‘high-performance work systems’ really make a difference to business performance? Using representative data from British workplaces, Michael White and Alex Bryson assess the value of human resource management – and ask whether it is possible for firms to have ‘too little’ or ‘too much.
    Date: 2013–12
  5. By: Slobodan Djajić; Michael S. Michael (IHEID, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: We study the interaction between the optimal immigration policy of a host country and education policy of a source country in a model of international migration of skilled workers. Acquisition of human capital is driven by the academic and career opportunities at home and abroad. Greater opportunities to migrate are found to increase the source country's net stock of human capital only under very stringent conditions concerning the shape of the utility function and of the production function for human capital, the country's emigration rate, and the international wage dierential. We use the model to examine the eects of technological improvements in the educational sector, changes in the academic curricula in the source country, and attitudes to immigration in the host country. Of key interest are the implications for the optimal spending on education in the source country and the optimal immigration quota of the host country.
    Keywords: Migration of skilled workers, immigration policy, education policy
    JEL: F22 J24 O15
    Date: 2014–05–09
  6. By: Dr Richard Dorsett
    Abstract: Many politicians believe they can intervene in the economy to improve people’s lives.  But can they?  In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people.  We follow a sub-sample of 3,500 single parents for 5 ensuing years.  The results reveal a remarkable, and troubling, finding.  Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt.  Thus helping people apparently hurt them.  We discuss a behavioral framework consistent with our findings and reflect on implications for policy.
    Date: 2014–02
  7. By: Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
    Abstract: There are strong links between the performance of US manufacturing plants and the quality of their systems of monitoring, targets and incentives, according to research by Professor Nicholas Bloom and colleagues. Their analysis of data on more than 30,000 establishments, gathered in the first large-scale survey of management practices in America, finds that effective performance monitoring, targets and incentives are strongly linked to more intensive use of IT. The study also finds that there is huge variation in management in America: for example, establishments in America's South and Midwest have more structured management practices on average than those in the Northeast and West. Higher management scores have a strong relationship with improved productivity and profits.
    Keywords: IT, management, productivity, organization
    JEL: M1
    Date: 2014–05
  8. By: M. Arouri; A. Bwn Youssef; Ceyhun Elgin
    Date: 2014–04
  9. By: Vanessa Mertins (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Jörg Franke (University of Dortmund (TU), Department of Economics); Ruslan Gurtoviy (University of Trier)
    Abstract: Our study analyzes the consequences of workers' participation in the wage setting process on effort exertion. The experimental design is based on a modified giftexchange game where the degree of workers’ involvement in the wage setting process is systematically varied among the workers. The experimental data reveals that workers' participation leads actually to a decline in effort exertion which can be explained by negative reciprocity of the respective worker. These results put some recently observed positive effects from workers' participation in experimental labor markets into perspective and are more in line with the ambiguous results from empirical studies.
    Keywords: participation, labor market, gift-exchange game, personnel economics, reciprocity
    JEL: C72 C91 J33 L23 M52 M55
    Date: 2014–03
  10. By: Fahn, Matthias
    Abstract: The need to give incentives is usually absent in the literature on minimum wages. However, especially in the service sector it is important how well a job is done, and employees must be incentivized to perform accordingly. Furthermore, many aspects regarding service quality cannot be verified, which implies that relational contracts have to be used to provide incentives. The present article shows that in this case, a minimum wage increases implemented effort, i.e., realized service quality, as well as the efficiency of an employment relationship. Hence, this paper can explain why productivity and service quality went up after the introduction of the British National Minimum Wage, and that this might actually have caused a more efficient labor market. Furthermore, several empirically observed implications of a (higher) minimum wage can be explained. It might reduce turnover of employees, have spillover effects on higher wages, and reduce wage dispersion.
    Keywords: Minimum Wages; Relational Contracts;
    JEL: C73 D21 J24 J31
    Date: 2014–03
  11. 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.
    JEL: E23 M1 M11
    Date: 2014–05
  12. By: Andres Giraldo; Juan Mendoza; Andrés Rosas; Dayana Tellez
    Abstract: We investigate the effect of coach dismissals on team performance in the Colombian Professional Soccer League. We use 5,600 observations encompassing first-division games played between 2003 and 2010. Because firing a coach might depend on team performance, we use the number of remaining matches in the season and the stage of the tournament as sources of exogenous variation in the probability of a coach dismissal. We find that firing a coach does not have a statistically significant effect on team performance measured by the number of points, the goal difference, the number of goals scored or the number of goals allowed. We relate our findings to the existing literature.
    Keywords: Coach Change, Soccer, Team Performance.
    JEL: J4 J63 L83
    Date: 2013–08–23
  13. By: Leautier, Frannie A.
    Abstract: Countries need capacity for a variety of reasons, including sustaining economic growth, generating jobs, reducing poverty, effectively managing development programmes, and transforming societies and economies. A lot of effort has been expended to develop
    Keywords: Africa, animal spirits, capacity economic transformation, human capital, institutions, performance, policy
    Date: 2014
  14. By: Sylvia Frühwirth-Schnatter; Martin Halla; Alexandra Posekany; Gerald J. Pruckner; Thomas Schober
    Abstract: Prior empirical research on the theoretically proposed interaction between the quantity and the quality of children builds on exogenous variation in family size due to twin births and focuses on human capital outcomes. The typical finding can be described as a statistically nonsignificant two-stage least squares (2SLS) esti- mate, with substantial standard errors. We regard these conclusions of no empirical support for the quantity-quality trade-off as premature and, therefore, extend the empirical approach in two ways. First, we add health as an additional outcome di- mension. Second, we apply a semi-parametric Bayesian IV approach for econometric inference. Our estimation results substantiate the finding of a zero effect: we provide estimates with an increased precision by a factor of approximately twenty-three, for a broader set of outcomes.
    Keywords: Quantity-quality model of fertility, family size, human capital, health,semi-parametric Bayesian IV approach
    JEL: J13 C26 C11 I20 J20 I10
    Date: 2014–03
  15. By: Bjoern Bartling (Department of Economics, University of Zurich, Swizerland); Leif Brandes (Warwick Business School, University of Warwick, UK); Daniel Schunk (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)
    Abstract: We show that professional soccer players and their coaches exhibit reference-dependent behavior during matches. Controlling for the state of the match and for unobserved heterogeneity, we show on a minute-by-minute basis that players breach the rules of the game, measured by the referee’s assignment of cards, significantly more often if their teams are behind the expected match outcome, measured by pre-play betting odds of large professional bookmakers. We further show that coaches implement significantly more offensive substitutions if their teams are behind expectations. Both types of behaviors impair the expected ultimate match outcome of the team, which shows that our findings do not simply reflect fully rational responses to referencedependent incentive schemes of favorite teams falling behind. We derive these results in a data set that contains more than 8’200 matches from 12 seasons of the German Bundesliga and 12 seasons of the English Premier League.
    Keywords: reference points, expectations, experience, high stakes, competition
    JEL: C23 D03 D81 D84
    Date: 2014–04–17
  16. By: Ilke Van Beveren (Lessius Department of Business Studies, KU Leuven); Stijn Vanormelingen (HU Brussels, KU Leuven)
    Abstract: This paper determines the relative importance of technical efficiency and reallocation for aggregate productivity growth in a small open European economy. To this end we use a dataset containing all Belgian firms active in the private sector, both services and manufacturing. We observe at the firm level a number of factors that have been shown to be drivers of productivity differences across firms. More precisely, we have information on human capital such as the level of education and the amount of on-the-job training received by the employees. Moreover we observe the international activities of the firms such as imports and exports. This allows us to make a careful analysis of the micro foundations of aggregate productivity growth by applying the decomposition introduced by Petrin and Levinsohn (2012). The outcome of this exercise will not only provide us with a better understanding of the slowdown of productivity growth in Europe over the past decades, but also give an indication on the role of different productivity drivers in this process.
    Keywords: Productivity, Productivity Decomposition
    JEL: D24 O47 C23
    Date: 2014–05
  17. By: Ghazala Azmat; Barbara Petrongolo
    Abstract: Lab experiments are an increasingly valuable tool for understanding differences in how men and women are treated in the labour market. Dr Ghazala Azmat and Professor Barbara Petrongolo explore what has been learned about the extent to which differences in men and women's pay and employment opportunities can be explained by discrimination or by differences in their preferences or productivity.
    Keywords: Gender, field experiments, lab experiments, discrimination, gender preferences
    JEL: J16 J24 J71 C91 C92 C93
    Date: 2014–05

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