nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒08‒25
twelve papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Training Contracts, Worker Overconfidence, and the Provision of Firm-Sponsored General Training By Mitchell Hoffman
  2. Labour Market Integration, Human Capital Formation, and Mobility By Alexander Haupt; Silke Übelmesser
  3. Is Productivity Growth Correlated with Improvements in Management Quality? An empirical study using interview surveys in Korea and Japan By MIYAGAWA Tsutomu; Keun LEE; EDAMURA Kazuma; YoungGak KIM; Hosung JUNG
  4. Human Assets Index Retrospective series: 2013 update By Michaël GOUJON; Mathilde CLOSSET; Sosso FEINDOUNO
  5. Progressive Taxation in a Tournament Economy By Carpenter, Jeffrey P.; Matthews, Peter Hans; Tabb, Benjamin
  6. Personality Characteristics, Educational Attainment and Wages: An Economic Analysis Using the British Cohort Study By Pamela Lenton
  7. Can Entrepreneurship Training Improve Work Opportunities for College Graduates? By World Bank
  8. Social psychology and gender efficiency wage gap By Jellal, Mohamed
  9. “Phantom of the Opera” or “Sex and the City”? – Historical Amenities as Sources of Exogenous Variation By Thomas K. Bauer; Philipp Breidenbach; Christoph M. Schmidt
  10. Income Receipt and Mortality: Evidence from Swedish Public Sector Employees By Andersson, Elvira; Lundborg, Petter; Vikström, Johan
  11. Paying More Wisely: Effects of Payment Reforms on Evidence-Based Clinical Decision-Making. By Timothy K. Lake; Eugene C. Rich; Christal Stone Valenzano; Myles M. Maxfield
  12. Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training By Fairlie, Robert W.; Karlan, Dean; Zinman, Jonathan

  1. By: Mitchell Hoffman (University of Toronto)
    Abstract: Training by firms is a central means by which workers accumulate human capital, yet firms may be reluctant to provide general training if workers can quit and use their gained skills elsewhere. ``Training contracts" that impose a penalty for premature quitting can help alleviate this inefficiency. Using two exogenously staggered contract changes at a leading trucking firm, we show that training contracts significantly reduce post-training quitting and increase the profitability of training. We demonstrate further that training contracts have especially large effects on training profits in our setting because of their interaction with worker overconfidence. If workers are overconfident about their own productivity at the current firm relative to their outside option, they will be more likely to sign training contracts and less likely to quit after training. Combining weekly productivity data with weekly productivity beliefs, we show that workers systematically overpredict their productivity, both with and without randomized financial incentives for accurate prediction. To quantify the impact of overconfidence for optimal contracts and welfare, we develop and estimate a structural learning model with biased beliefs that accounts for many key features of the data. Eliminating worker overconfidence would moderately increase worker welfare by 1.7%, but would decrease training profits by over $8,000 per truck and substantially alter the optimal training contract. We confirm the feasibility of reducing overconfidence using an information experiment at a second large trucking firm. Despite the positive effect of training contracts on profits, training may not be profitable unless workers are overconfident.
    Date: 2014
  2. By: Alexander Haupt (Plymouth University and CESifo); Silke Übelmesser (School of Economics and Business Administration, Friedrich-Schiller-University Jena, and CESifo)
    Abstract: In this paper, we analyse the implications of labour market integration in a two-region model with local human capital externalities and congestion eects. We show that integration can be a double-edged sword. Integration and the ensuing agglomeration of skilled labour can reduce 'real' income in both regions. Even if there is a 'winning' region, human capital and real income in the two regions together might decline (but need not). However, integration can increase total real income even if it depresses human capital formation. We further explore how the degree of labour mobility and the strength of the congestion eects shape the impact of integration on human capital and income.
    Keywords: Human capital, migration, labour market integration, agglomeration
    JEL: F22 R23 J24 R12
    Date: 2014–08–19
  3. By: MIYAGAWA Tsutomu; Keun LEE; EDAMURA Kazuma; YoungGak KIM; Hosung JUNG
    Abstract: Bloom and Van Reenen (2007) show that differences in management practices are correlated with productivity differences at the firm level. In this paper, we conducted similar interview surveys on management practices in Japanese and Korean firms in 2008 and 2012. We find that overall management scores in Japan—as an average of organizational and human resource management scores—are higher than those in Korea. However, the second survey shows that the gap in management scores between the two countries has shrunken over time. In addition, the average management quality in Korean large firms has surpassed that of Japanese large firms. This result is consistent with the literature comparing big businesses in Korea and Japan. This study also compares additional aspects of management styles, such as speed in decision making and the role of various communication channels, which is not done in the literature. When we estimate a production function including management score using all samples, we find a positive and significant relationship between management scores and productivity. Most estimation results show that organizational management scores are correlated with firm performances in Japanese firms, while human resource management scores are correlated with performance in Korean firms. We also find that management practices are correlated with improvements in capital and labor efficiencies. In the case of Japan, better organizational management practices in the past improve current firm performance. Our results show that the Japanese government and firms should promote management reforms to restore international competitiveness.
    Date: 2014–08
  4. By: Michaël GOUJON (Université d'Auvergne); Mathilde CLOSSET (FERDI); Sosso FEINDOUNO (Ferdi)
    Abstract: Human capital, a broad concept including education and health, plays a central role in economic development and human well-being.  As a consequence, low human capital became one of the three criteria used by the United Nations Committee for Development Policy (UN-CDP) for identifying Least Developed Countries (LDCs). Since 1991, the UN-CDP has used a composite index to measure human capital at the country level. In 2003 this index was reshaped and was renamed the Human Assets Index (HAI) (see UN-CDP webpage on LDCs, and Guillaumont, 2009).
    JEL: I31 I32
    Date: 2014–07
  5. By: Carpenter, Jeffrey P. (Middlebury College); Matthews, Peter Hans (Middlebury College); Tabb, Benjamin (Middlebury College)
    Abstract: Not enough is known about the responsiveness of individuals, in particular those who tend to work under different incentives, to changes in marginal tax rates. We ask whether changes in marginal tax rates are less distortionary for workers engaged in a contest. To examine this potential rationale for a more progressive tax code, we first model the effort decisions of workers faced with progressive taxation under tournaments and piece rates. Because of the difficulty identifying any distortion that may be induced by the tax code in naturally occurring data, we then report on the results of a real-effort experiment based on this model. Consistent with a behavioral approach to public finance, we find that tournament workers are less sensitive, and conclude with a tentative evaluation of the welfare benefits of progressive taxation in tournament economies.
    Keywords: taxation, tournaments, public good, real effort experiment
    JEL: H20 H41 J22 J33 C91
    Date: 2014–08
  6. By: Pamela Lenton (Department of Economics, University of Sheffield, UK)
    Abstract: We look at the influence of personality traits and cognitive ability on both educational attainment and on the wages of individuals in the UK labour market at age 33 using the British Cohort Study. We control for a new cluster of nine personality characteristics, some of which we consider likely to influence labour market outcomes. We find that some personality characteristics have significant influence on the acquisition of educational qualifications, in particular internal and external locus of control, conscientiousness and extroversion. Our findings on the extrovert-introvert dimension of personality are paradoxical: we find that males with extrovert personalities have a significantly reduced probability of gaining degree level education, but within the labour market males are rewarded for this characteristic.
    Keywords: educational attainment; human capital; personality characteristics
    JEL: J24
    Date: 2014–08
  7. By: World Bank
    Keywords: Education - Educational Sciences Tertiary Education Secondary Education Teaching and Learning Education - Primary Education
    Date: 2013–04
  8. By: Jellal, Mohamed
    Abstract: Our paper introduces the dimension of social psychology in a model of efficiency wages and gender diversity. In this context, we show that women earn lower wages than men but provide in return relatively less effort. Therefore in order to increase women's productivity, the firm increases their level of employment. In our efficiency-wage theory, women’s lower wages is explained by assuming that efficiency-wages function for women are believed to be different from those of men. This could be the case if the firm believes that women do not react with more effort to higher wages because they are not work career oriented, so it might not be worth it to pay them high wages. In that case, firms would employ more women for the minimum possible wage. This assumption can be based on stereotypes describing about women as more averse to wage competition pressure than men and less career oriented.
    Keywords: Gender Diversity, Social Psychology ,Stereotypes, Efficiency Wage Gap.
    JEL: J01 J31 J7 J71 J82 Z1
    Date: 2014–08–11
  9. By: Thomas K. Bauer; Philipp Breidenbach; Christoph M. Schmidt
    Abstract: Using the location of baroque opera houses as a natural experiment, Falck et al. (2011) claim to document a positive causal effect of the supply of cultural goods on today’s regional distribution of talents. This paper raises serious doubts on the validity of the identification strategy underlying these estimates, though. While we are able to replicate the original results, we proceed to show that the same empirical strategy also assigns positive causal effects to the location of historical brothels and breweries. These estimated effects are similar in size and significance to those of historical opera houses. We document that all these estimates reflect the importance of institutions for longrun economic growth, and that the effect of historical amenities on the contemporary local share of high skilled workers disappears upon controlling for regions’ historical importance.
    Keywords: Human capital; historical amenities; regional competiveness
    JEL: R11 H42 J24
    Date: 2014–07
  10. By: Andersson, Elvira (Lund University); Lundborg, Petter (Lund University); Vikström, Johan (IFAU)
    Abstract: In this paper, we study the short-run effect of salary receipt on mortality among Swedish public sector employees. By exploiting variation in pay-days across work-places, we completely control for mortality patterns related to, for example, public holidays and other special days or events coinciding with paydays and for general within-month and within-week mortality patterns. We find a dramatic increase in mortality on the day salaries arrive. The increase is especially pronounced for younger workers and for deaths due to activity-related causes such as heart conditions and strokes. Additionally, the effect is entirely driven by an increase in mortality among low income individuals, who are more likely to experience liquidity constraints. All things considered, our results suggest that an increase in general economic activity upon salary receipt is an important cause of the excess mortality.
    Keywords: income, mortality, health, consumption, liquidity constraints, permanent income hypothesis
    JEL: D91 H31 H55 I10 I12 I38
    Date: 2014–08
  11. By: Timothy K. Lake; Eugene C. Rich; Christal Stone Valenzano; Myles M. Maxfield
    Abstract: This article reviews the recent research, policy, and conceptual literature on the effects of payment policy reforms on evidence-based clinical decision making by physicians at the point of care. Payment reforms include recalibration of existing fee structures in fee-for-service, pay-for-quality, episode-based bundled payments and global payments. The authors review the advantages and disadvantages of these reforms in terms of their effects on physicians’ and patients’ use of evidence in clinical decisions related to the diagnosis, testing, treatment, and management of disease. They conclude with a recommended pathway for improving payment incentives to better support evidence-based decision making.
    Keywords: Comparative Effectiveness Research, Evidence-Based Decision-Making, Incentive, Physician Payment Reform
    JEL: I
    Date: 2013–05–30
  12. By: Fairlie, Robert W. (University of California, Santa Cruz); Karlan, Dean (Yale University); Zinman, Jonathan (Dartmouth College)
    Abstract: Theories of market failures and targeting motivate the promotion of entrepreneurship training programs and generate testable predictions regarding heterogeneous treatment effects from such programs. Using a large randomized evaluation in the United States, we find no strong or lasting effects on those most likely to face credit or human capital constraints, or labor market discrimination. We do find a short-run effect on business ownership for those unemployed at baseline, but this dissipates at longer horizons. Treatment effects on the full sample are also short-term and limited in scope: we do not find effects on business sales, earnings, or employees.
    Keywords: entrepreneurship, training, random experiment, evaluation, self-employment
    JEL: L26 J24
    Date: 2014–08

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