nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒07‒21
ten papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. If I close my eyes, nobody will get hurt. The effect of ignorance on performance in a real effort experiment By Agne Kajackaite
  2. Competition and Screening with Skilled and Motivated Workers By F. Barigozzi; N. Burani
  3. Games with Money and Status: How Best to Incentivize Work By Pradeep Dubey; John Geanakoplos
  4. Time Use and Productivity: The Wage Returns to Sleep By Gibson, Matthew; Shrader, Jeffrey
  5. Giving and promising gifts: experimental evidence on reciprocity from the field By J. Michelle Brock; Andreas Lange; Kenneth L. Leonard
  6. Paying For Primary Care: The Factors Associated With Physician Self-Selection Into Payment Models By David Rudoler; Raisa Deber; Janet Barnsley; Richard Glazier; Audrey Laporte
  7. Optimal taxation and debt with uninsurable risks to human capital accumulation By Gottardi, Piero; Kajii, Atsushi; Nakajima, Tomoyuki
  8. Bank Efficiency and Executive Compensation By Timothy King; Jonathan Williams
  9. Managing Intrinsic Motivation in a Long-Run Relationship By Kfir Eliaz; Ran Spiegler
  10. Typhoid Fever, Water Quality, and Human Capital Formation By Brian Beach; Joseph Ferrie; Martin Saavedra; Werner Troesken

  1. By: Agne Kajackaite (University of Cologne)
    Abstract: This paper tests whether staying ignorant about the negative consequences of one's own actions affects agents' performance in a real effort experiment. We conducted treatments in which subjects' effort either increased only one's own payoff or also increased the donation to a bad charity. Ignorance was introduced by letting agents to decide whether or not to learn if the effort benefits the charity. Overall, we find that in the conditions with complete information agents exert significantly higher efforts if there are no benefits for the bad charity. With respect to ignorance, we show that (i) almost a third of agents stay ignorant, and (ii) the ignorant agents exert significantly more effort than agents who know that their effort benefits the bad charity. We also find evidence for a sorting of low social types into ignorance, as exogenously uninformed agents exert less effort than ignorant agents.
    Keywords: ignorance, moral wiggle room, experiment, real effort
    JEL: C91 D03 D80 M52
    Date: 2014–06
  2. By: F. Barigozzi; N. Burani
    Abstract: We study optimal contracts offered by two firms competing for the exclusive services of one worker, who is privately informed about her ability and her motivation. Firms differ both in their production technology and in the mission they pursue and a motivated worker is keen to be hired by the mission-oriented firm. We find that the matching of worker types to firms is always Pareto-efficient. When the difference in firms’ technology is high, only the most efficient firm is active. When the difference is not very high, then agent types sort themselves by motivation: the mission-oriented firm hires motivated types and the profit-oriented firm employs non-motivated ones, independently of ability. Effort provision is higher when the worker is hired by the mission-oriented firm, but a compensating wage differential might exist: the motivated worker is paid less by the mission-oriented firm. Such an earnings penalty is driven entirely by motivation and is increasing in ability.
    JEL: D82 D86 J31 M55
    Date: 2014–06
  3. By: Pradeep Dubey (SUNY); John Geanakoplos (Cowles Foundation, Yale University)
    Abstract: Status is greatly valued in the real world, yet it has not received much attention from economic theorists. We examine how the owner of a firm can best combine money and status together to get his employees to work hard for the least total cost. We find that he should motivate workers of low skill mostly by status and high skill mostly by money. Moreover, he should do so by using a small number of titles and wage levels. This often results in star wages to the elite performers.
    Keywords: Status, Incentives, Wages
    JEL: C70 I20 I30
    Date: 2014–07
  4. By: Gibson, Matthew; Shrader, Jeffrey
    Abstract: While economists have long been interested in effects of health and human capital on productivity, less attention has been paid to the influence of time use. We investigate the productivity effects of the single largest use of time--sleep. Because sleep influences performance on memory and focus intensive tasks, it plausibly affects economic outcomes. We identify the effect of sleep on wages by exploiting the relationship between sunset time and sleep duration. Using a large, nationally representative set of time use diaries from the United States, we provide the first causal estimates of the impact of sleep on wages: a one-hour increase in long-run average sleep increases wages by 16%, equivalent to more than one year of schooling. We also document the nonlinearity of the sleep-wage relationship. Our results highlight the economic importance of sleep and pose potentially fruitful questions about the effects of time use on labor market outcomes. (JEL No. J22, J24, J31)
    Keywords: Social and Behavioral Sciences
    Date: 2014–07–14
  5. By: J. Michelle Brock (European Bank for Reconstruction and Development); Andreas Lange (University of Hamburg, Department of Economics); Kenneth L. Leonard (University of Maryland, Department of Agricultural and Resource Economics)
    Abstract: In this study, we consider how gift-exchange and bonus systems function in a natural field setting by measuring the effort response of participants to non-monetary gifts over time. Our field experiment tests the difference in effort response to unconditional gifts delivered immediately, promised unconditional gifts delivered later, and conditional gifts linked to reaching a specific performance target. We find important benefits from promising to give an unconditional gift later: participants respond positively to a promised gift twice by increasing effort when the gift is promised and again when it is received. A promised gift outperforms both the unconditional gift delivered immediately, which leads to a single positive response, and the conditional gift based on performance, which does not trigger any significant behavioural change after the gift is delivered. The study lends insights into the relative effectiveness of gift-exchange and bonus systems and the temporal structure of reciprocal exchange.
    Keywords: gift exchange, reciprocity, health care, field experiment, Tanzania
    JEL: C93 I1 J41 O1
    Date: 2014–01
  6. By: David Rudoler; Raisa Deber; Janet Barnsley; Richard Glazier; Audrey Laporte
    Abstract: In this paper we use a panel of administrative data to determine the factors associated with primary care physician self-selection into different payment models in Ontario, Canada. We find that primary care physicians will self-select into payment models based on existing practice and individual characteristics. These patterns of self-selection largely follow a utility maximizing model of physician behaviour; physicians with more complex patient populations are less likely to switch into capitation-based payment models where higher levels of effort are not financially rewarded. These findings have implications for future work that considers the impact of payment incentives on provider behaviour, and for governments introducing multiple payment models in a single healthcare sector.
    Keywords: Physician behaviour, financial incentives, administrative data, panel data
    JEL: D22 D21 I11
    Date: 2014–03
  7. By: Gottardi, Piero; Kajii, Atsushi; Nakajima, Tomoyuki
    Abstract: We consider an economy where individuals face uninsurable risks to their human capital accumulation, and study the problem of determining the optimal level of linear taxes on capital and labor income together with the optimal path of the debt level. We show both analytically and numerically that in the presence of such risks it is beneficial to tax both labor and capital income and to have positive government debt..
    Keywords: Ramsey equilibrium; Optimal taxation; Incomplete markets; Optimal public debt
    JEL: D52 D60 D90 E20 E62 H21 O40
    Date: 2014
  8. By: Timothy King (Leeds University); Jonathan Williams (Bangor University, UK)
    Abstract: We investigate whether handsomely rewarding bank executives’ realizes superior efficiency by determining if executive remuneration contracts produce incentives that offset potential agency problems and lead to improvements in bank efficiency. We calculate executive Delta and Vega to proxy executives’ risk-taking following changes in their compensation contracts and estimate their relationship with alternative profit efficiency. Our study uses novel instruments to account for the potentially endogenous relationship between efficiency and Delta and Vega whilst controlling for the structure of executive compensation, board structure, and bank-level characteristics. Our main results demonstrate that shareholders use executive Vega to incentivise executives into taking risks that improve bank efficiency, and also that executive perquisites can be used to attract and retain executives which ex post deliver efficiency gains.
    Keywords: Banks, corporate governance, executive remuneration, efficiency, stochastic frontier.
    JEL: C2 G21 G3
    Date: 2013–09
  9. By: Kfir Eliaz (Tel Aviv University, Eitan Berglas School of Economics; University of Michigan, Economics Department); Ran Spiegler (Tel Aviv University, Eitan Berglas School of Economics; Centre for Macroeconomics (CFM))
    Abstract: We study a repeated principal-agent interaction, in which the principal offers a "spot" wage contract at every period, and the agent’s outside option follows a Markov process with i.i.d shocks. If the agent rejects an offer, the two parties are permanently separated. At any period during the relationship, the agent is productive if and only if his wage does not fall below a "reference point" (by more than an infinitesimal amount), which is defined as his lagged-expected wage in that period. We characterize the game’s unique subgame perfect equilibrium. The equilibrium path exhibits an aspect of wage rigidity. The agent’s total discounted rent is equal to the maximal shock value.
    Date: 2014–06
  10. By: Brian Beach; Joseph Ferrie; Martin Saavedra; Werner Troesken
    Abstract: Investment in water purification technologies led to large mortality declines by helping eradicate typhoid fever and other waterborne diseases. This paper seeks to understand how these technologies affected human capital formation. We use typhoid fatality rates during early life as a proxy for water quality. To carry out the analysis, city-level data are merged with a unique dataset linking individuals between the 1900 and 1940 censuses. Parametric and semi-parametric estimates suggest that eradicating early-life exposure to typhoid fever would have increased earnings in later life by 1% and increased educational attainment by one month. Instrumenting for typhoid fever using the typhoid rates from cities that lie upstream produces similar results. A simple cost-benefit analysis indicates that the increase in earnings from eradicating typhoid fever was more than sufficient to offset the costs of eradication.
    JEL: I0 J0 N0
    Date: 2014–07

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