nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒09‒05
twelve papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. A repeated principal-agent model with on-the-job search By Herbold, Daniel
  2. Optimal Design of Internal Disclosure By Dmitry Orlov
  3. "Preference for Flexibility and Random Choice: an Experimental Analysis" By Mark Dean; John McNeil
  4. Work incentive and productivity in Spain By Rosario Sanchez; Mª Isabel Pisa
  5. The Biocultural Origins of Human Capital Formation By Marc Klemp; Oded Galor
  6. Reforms, Incentives and Banking Sector Productivity: A Case of Nepal By Luintel, Kul B; Selim, Sheikh; Bajracharya, Pushkar
  7. Productivity Shocks, Dynamic Contracts and Income Uncertainty By Thibaut Lamadon
  8. Availability of Family-Friendly Work Practices and Implicit Wage Costs: New Evidence from Canada By Ali Fakih
  9. Development inclinations of the human potential in the CIS countries By Qanimat Safarov
  10. Does Labor Legislation Benefit Workers? Well-Being after an Hours Reduction By Daniel S. Hamermesh; Daiji Kawaguchi; Jungmin Lee
  11. CSR related management practices and Firm Performance: An Empirical Analysis of the Quantity-Quality Trade-off on French Data By Patricia Crifo; Marc-Arthur Diaye; Sanja Pekovic
  12. Human capital investment and population growth: An overlapping generations analysis for Malawi By Kristinn Hermannsson; Patrizio Lecca

  1. By: Herbold, Daniel
    Abstract: This paper analyzes how on-the-job search (OJS) by an agent impacts the moral hazard problem in a repeated principal-agent relationship. OJS is found to constitute a source of agency costs because efficient search incentives require that the agent receives all gains from trade. Further, the optimal incentive contract with OJS matches the design of empirically observed compensation contracts more accurately than models that ignore OJS. In particular, the optimal contract entails excessive performance pay plus efficiency wages. Efficiency wages reduce the opportunity costs of work effort and hence serve as a complement to bonuses. Thus, the model offers a novel explanation for the use of efficiency wages. When allowing for renegotiation, the model generates wage and turnover dynamics that are consistent with empirical evidence. I argue that the model contributes to explaining the concomitant rise in the use of performance pay and in competition for high-skill workers during the last three decades. --
    Keywords: Repeated Principal-Agent Model,On-the-Job Search,Moral Hazard,Multitasking,Efficiency Wages
    JEL: C73 D82 D86 J33 L14
    Date: 2014
  2. By: Dmitry Orlov (Stanford Graduate School of Business)
    Abstract: This paper studies the joint design of optimal incentive pay and information disclosure in a dynamic moral hazard problem. The principal is more informed about the outcomes of agent's actions and actively manages information available to the agent. Sharing information with the agent increases productivity (for example, allowing a better allocation of resources or effort), but increases the cost of providing incentives. The optimal contract features incomplete information sharing with positive information shared more than negative information and past negative information leading to less information sharing in the future.
    Date: 2014
  3. By: Mark Dean; John McNeil
    Abstract: People may be uncertain about future preferences, leading to both a preference for flexibility in choice between menus and stochastic choice from menus. This paper describes an experimental test of preference uncertainty in a realeffort task. We observe subjects’ preferences over menus of work contracts, along with their choices of effort levels from those contracts. Our results suggest that preference uncertainty is important: 48% of our subjects exhibited strict preference for flexibility. A model of preference uncertainty (Ahn and Sarver (2013)) well describes the relationship between choice of and from menus: subjects willing to pay to include an option in a contact were more likely to use that option, and those that used an option were prepared to pay for it. We show that the introduction of an explicit stochastic element to the contract increased preference for flexibility, suggesting a causal role for uncertainty in menu preferences
    Keywords: #
    Date: 2014
  4. By: Rosario Sanchez; Mª Isabel Pisa
    Abstract: Work incentives are closely related with production performance. This paper presents evidence that firm level value added increases when the relative labour cost rises, or the level of unemployment increases. Both facts imply evidence in favour of the efficiency wage model. This theory is consistent with the views of many managers and personal administrator, who tend to ascribe primary importance in wage setting to incentive effort. We use a micro panel data set of Spanish manufacturing firms, during the period 2004–2009, to simultaneously estimate a stochastic frontier of firm’s value added and the inefficiency determinants. The data source is published in the Spanish Industrial Survey on Business Strategies (Encuesta sobre Estrategias Empresariales, ESEE), collected by the Fundación Empresa Pública (FEP). See above See above
    Keywords: Spain, Impact and scenario analysis, Impact and scenario analysis
    Date: 2013–06–21
  5. By: Marc Klemp (Brown University); Oded Galor (Brown University)
    Abstract: This research presents the first evidence that moderate fecundity was conducive to 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 the onset of the demographic transition and the evolution of societies from an epoch of stagnation to sustained economic growth.
    Date: 2014
  6. By: Luintel, Kul B (Cardiff Business School); Selim, Sheikh (Cardiff Business School); Bajracharya, Pushkar
    Abstract: We model banks as profit-cum-utility maximizing firms and study, inter alia, bankers’ incentives (optimal effort) and incentive driven productivity following deregulations. Our model puts to test a panel of Nepalese commercial banks which went through deep financial reforms in the recent past. We find that (i) bankers’ efforts and productivity have notably improved in Nepal, (ii) bankers’ efforts significantly explain the banking sector’s productivity, (iii) the proportion of non-performing loans has considerably declined, and (iv) banking services have become costly, although the bank spread has moderately declined. Our approach is different from the widely used data envelopment analysis (DEA) of bank productivity, hence complements the literature. It also informs the current policy debate in Nepal where the Central Bank is seen to be geared towards regulating the financial system and micro-managing the banking institutions.
    Keywords: Reforms; incentives; productivity; panel integration; cointegration; simulation
    JEL: G21 G28 O43 O53
    Date: 2014–08
  7. By: Thibaut Lamadon (University College London)
    Abstract: This paper examines how employer and worker specific productivity shocks transmit to wage and employment in an economy with search frictions and firm commitment. I develop an equilibrium search model with worker and firm shocks and characterize the optimal contract offered by competing firms to attract and retain workers. In equilibrium risk-neutral firms offer risk-averse workers contingent contracts where payments are back-loaded in good times and front-loaded in bad ones: the combination of search frictions, productivity shocks and private worker actions results in partial insurance against firm and worker shocks. I estimate the model on matched employer-employee data from Sweden, using information about co-workers to separately identify firm specific and worker specific earnings shocks. Preliminary estimates suggest that firm level shocks are responsible for about 20% of permanent income fluctuations, the remaining being accounted for by individual level shocks (30% to 40%) and by job mobility (40% to 50%). The wage contract attenuates 80% of individual productivity shocks but passes through 30% of firm productivity fluctuations.
    Date: 2014
  8. By: Ali Fakih
    Abstract: Using Canadian linked employer-employee data covering the period 1999-2005, I examine the determinants of the availability of family-friendly “care” practices and the impact of such practices on wages. The results show that the provision of family-friendly practices is not mainly derived from socio-demographic characteristics of workers but rather from job- and firm-related factors. The findings also reveal that there is a trade-off between the provision of family-friendly practices and earnings indicating the existence of an implicit market in which workers face reductions in their wages. This result supports the hypothesis that family-friendly benefits are to some extent conceived as a gift or a signal that employers care about employees’ family responsibilities and, in return, employees are willing to “buy” these practices and thus accept a wage offset.
    Keywords: Family-friendly “care” practices, linked employer-employee data, simultaneous probit model, wage equation.,
    JEL: J13 J32 J70
    Date: 2014–06–01
  9. By: Qanimat Safarov
    Abstract: This article has investigated the trend of human development in the Azerbaijan Republic. It was accordingly analyze indices subgroups affecting human development, and compared the average for the countries of the Caucasus, the CIS and the world. It was also summarized the factors affecting human development and to develop proposals and recommendations. See above See above
    Keywords: Azerbaijan, Regional integration, Regional integration
    Date: 2013–09–05
  10. By: Daniel S. Hamermesh; Daiji Kawaguchi; Jungmin Lee
    Abstract: Are workers in modern economies working “too hard”—would they be better off if an equilibrium with fewer work hours were achieved? We examine changes in life satisfaction of Japanese and Koreans over a period when hours of work were cut exogenously because employers suddenly faced an overtime penalty that had become effective with fewer weekly hours per worker. Using repeated cross sections we show that life satisfaction in both countries may have increased relatively among those workers most likely to have been affected by the legislation. The same finding is produced using Korean longitudinal data. In a household model estimated over the Korean cross-section data we find some weak evidence that a reduction in the husband’s work hours increased his wife’s well-being. Overall these results are consistent with the claim that legislated reductions in work hours can increase workers’ happiness.
    JEL: E24 J23
    Date: 2014–08
  11. By: Patricia Crifo; Marc-Arthur Diaye; Sanja Pekovic
    Abstract: This paper analyzes how different combinations of Corporate Social Responsibility (CSR) dimensions affect corporate economic performance. We use various dimensions of CSR to examine whether firms rely on different combinations of CSR, in terms of quality versus quantity of CSR practices. Our empirical analysis based on an original database including 10,293 French firms shows that different CSR dimensions in isolation impact positively firms’ profits but their effect in term on intensity varies among CSR dimensions. Moreover, the findings on the qualitative CSR measure, based on interaction between its dimensions, show that the substitutability of these dimensions is highly significant for firm performance. However, in terms of the intensity, those interactions produce differential effects.
    Keywords: corporate social responsibility, firm performance, substitutability, complementarity, trade-off, simultaneous equations models,
    Date: 2014–07–01
  12. By: Kristinn Hermannsson; Patrizio Lecca
    Abstract: Recent work on human capital accumulation has tended to abstract from population change. This is a reasonable simplification when analysing economies with relatively static populations, such as high income countries. However, many low income countries are undergoing rapid population change, which significantly influences the impact of human capital policies. This is acerbated as the rate of expansions of education systems is limited due to funding constraints and ability to train skilled teaching staff. To analyse this issue we construct an overlapping generations (OLG) numerical simulation model to simulate the simultaneous impact of human capital accumulation and population change. We calibrate this for Malawi, a small sub-Saharan country, which has made significant progress in expanding its education system, but is also projected to experience rapid population growth. Furthermore, there is evidence to suggest that demographics are not invariant of education policies. We explore how expansion of education (in particular secondary education of women) could influence population growth and how this modifies the impact of human capital policies. In aggregate we expect expanding education to have a positive economic impact. However, ex ante it is more difficult to predict impact of population growth due to influence of fixed factors such as land. On a per capita basis we expect education to have a positive impact, but population growth to dilute the per capita human capital accumulation. We are interested in exploring where the pivotal point lies w.r.t. to the growth of GDP per capita how this compares to current projections for population and education growth in Malawi.
    Keywords: Malawi, General equilibrium modeling, Developing countries
    Date: 2014–07–03

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