nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒11‒01
eleven papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Human Capital in European Regions since the French Revolution By Ralph Hippe
  2. Human Capital Outflow and Economic Misery: Fresh Evidence for Pakistan By Amjad Ali; NooreenMujahid; Yahya Rashid; Muhammad Shahbaz
  3. Social Comparison and Peer effects with Heterogeneous Ability By Aurélie BONEIN
  4. Managerial Compensation, Regulation and Risk in Banks: Theory and Evidence from the Financial Crisis By Vittoria Cerasi; Tommaso Oliviero
  5. Sickness Absence and Works Councils: Evidence from German Individual and Linked Employer-Employee Data By Daniel Arnold; Tobias Brändle; Laszlo Goerke
  6. The Complexity of CEO Compensation By Jarque, Arantxa
  7. Survey Incentives, Survey Effort, and Survey Costs By Bricker, Jesse
  8. Works Councils and Collective Bargaining in Germany: A Simple but Crucial Theoretical Extension By Uwe Jirjahn
  9. Academic performance and the Great Recession By Effrosyni Adamopoulou; Giulia Martina Tanzi
  10. Risk-sharing or risk-taking? An incentive theory of counterparty risk, clearing and margins By Biais, Bruno; Heider, Florian; Hoerova, Marie
  11. Innovation in education and re-industrialisation in Europe By Paola Mengoli; Margherita russo

  1. By: Ralph Hippe (Grantham Research Institute on Climate Change and the Environment London School of Economics and Political Science)
    Date: 2014
  2. By: Amjad Ali; NooreenMujahid; Yahya Rashid; Muhammad Shahbaz
    Abstract: This paper visits the impact of economic misery on human capital outflow using time series data over the period of 1975-2012. We have applied the combined cointegration tests and innovative accounting approach to examine long run and causal relationship between the variables. Our results affirm the presence of cointegration between the variables. We find that economic misery increases human capital outflow. Foreign remittances add in human capital outflow from Pakistan. The migration from Pakistan to rest of world is boosted by depreciation in local currency. Income inequality is also a major contributor to human capital outflow. The present study is comprehensive effort and may provide new insights to policy makers for handling the issue of human capital outflow by controlling economic misery in Pakistan.
    Keywords: Economic misery, human capital outflow, Pakistan
    Date: 2014–09–25
  3. By: Aurélie BONEIN (CREM UMR CNRS 6211, University of Rennes 1, France)
    Abstract: Whether and how the observability of a coworker’s effort influences an employer’s wage decisions and workers’ effort decisions is a central issue for labor organizations. We conduct an experiment using a three-person gift-exchange game to investigate this matter in the context of wage transparency and heterogeneous abilities. We find that showing a coworker’s effort increases both wages and the difference in wages between two heterogeneously skilled workers when the more able worker is observed. The knowledge of a coworker’s effort increases the level of reciprocity exhibited by observed workers (peer effects), whereas it reduces that exhibited by workers who are observers. Overall, displaying coworker’s effort has a beneficial effect on reciprocity. Regardless of their ability, workers exert levels of effort that are positively related to those of their coworkers. This strategic complementarity of efforts is partially explained by inequity aversion.
    Keywords: Heterogeneous ability, Gift-exchange game, Social comparison, Peer effect, Reciprocity
    JEL: C91 D03 J24 J31 J82
    Date: 2014–08
  4. By: Vittoria Cerasi (Università di Milano Bicocca); Tommaso Oliviero (CSEF, Università di Napoli Federico II)
    Abstract: This paper analyzes the relation between CEOs monetary incentives, financial regulation and risk in banks. We present a model where banks lend to opaque entrepreneurial projects to be monitored by managers; managers are remunerated according to a pay-for-performance scheme and their effort is unobservable to depositors and shareholders. Within a prudential regulatory framework that defines a capital requirement and a deposit insurance, we study the effect of increasing the variable component of managerial compensation on risk taking. We then test empirically how monetary incentives provided to CEOs in 2006 affected banks' stock price and volatility during the 2007-2008 financial crisis on a sample of large banks around the World. The cross-country dimension of our sample allows us to study the interaction between CEO incentives and financial regulation. The empirical analysis suggests that the sensitivity of CEOs equity portfolios to stock prices and volatility has been indeed related to worse performance in countries with explicit deposit insurance and weaker monitoring by shareholders. This evidence is coherent with the main prediction of the model, that is, the variable part of the managerial compensation, combined with weak insiders' monitoring, exacerbates the risk-shifting attitude by managers.
    Keywords: Executive Compensation, Risk Taking, Financial Regulation, Monitoring.
    JEL: G21 G38
    Date: 2014–10–08
  5. By: Daniel Arnold; Tobias Brändle; Laszlo Goerke
    Abstract: Using both household and linked employer-employee data for Germany, we assess the effects of non-union representation in the form of works councils on (1) individual sickness absence rates and (2) a subjective measure of personnel problems due to sickness absence as perceived by a firm's management. We find that the existence of a works council is positively correlated with the incidence and the annual duration of absence. We observe a more pronounced correlation in western Germany which can also be interpreted causally. Further, personnel problems due to absence are more likely to occur in plants with a works council.
    Keywords: Absenteeism, LIAB, personnel problems, sickness absence, SOEP, works councils
    JEL: J53 I18 M54
    Date: 2014
  6. By: Jarque, Arantxa (Federal Reserve Bank of Richmond)
    Abstract: I study firm characteristics that justify the use of options or refresher grants in the optimal compensation packages for CEOs in the presence of moral hazard. I model explicitly the determination of stock prices as a function of the output realizations of the firm: Symmetric learning by all parties about the exogenous quality of the firm makes stock prices sensitive to output observations. Compensation packages are designed to transform this sensitivity of prices-to-output into the sensitivity of consumption-to-output that is dictated by the optimal contract. Heterogeneity in the structure of firm uncertainty implies that some firms are able to implement the optimal contract with very simple schemes that do not include options, refresher grants, or perks, while others need to use these more complex and potentially less transparent instruments.
    JEL: D80 D82 D86 G30
    Date: 2014–10–02
  7. By: Bricker, Jesse (Board of Governors of the Federal Reserve System (U.S.))
    Abstract: This paper uses the 2007 and 2010 waves of the Survey of Consumer Finances (SCF) to investigate how monetary incentives affect the time and effort that interviewers expend during the survey field period, and how these incentives affect effort expended by the survey respondent. The results imply that a larger monetary incentive offer helps reduce contact attempts and time in the field while maintaining data quality and effort during the survey by the respondent. Our results are based on a quasi-experiment that varies which families receive an incentive offer letter. Supporting evidence is given through a comparison of field effort outcomes between 2010 and 2007 after the base incentive increased from $20 in 2007 to $50 in 2010.
    Keywords: Incentives; data quality; contact attempts; record-of-call paradata
    Date: 2014–10–14
  8. By: Uwe Jirjahn
    Abstract: A model by Huebler and Jirjahn (2003) suggests that rent-seeking activities of works councils are more limited in establishments covered by collective bargaining. The model predicts that works councils should have a stronger productivity effect and a weaker wage effect in covered than in uncovered establishments. While empirical studies have provided supporting evidence for the predicted productivity effects, the results on the wage effects of works councils in covered and uncovered establishments are very mixed. This article extends Huebler and Jirjahn’s model to reconcile the empirical findings. The extended model takes into account that collective bargaining coverage not only limits the opportunities for rent-seeking activities but also strengthens the effectiveness of performance-enhancing work practices negotiated between employers and works councils. The latter influence of collective bargaining coverage can result in a higher wage effect of works councils in covered establishments.
    Keywords: Works Council, Collective Bargaining Coverage, Productivity, Wages
    JEL: J24 J31 J51 J53
    Date: 2014
  9. By: Effrosyni Adamopoulou (Bank of Italy); Giulia Martina Tanzi (Bank of Italy)
    Abstract: In this paper we study how the Great Recession affected university students in terms of performance, with a focus on the drop-out probability. To do so, we use individual-level data on a representative sample of university students in Italy in 2007 and 2011. We measure the severity of the recession in terms of increases in the adult and youth unemployment rates and we exploit geographical variation to achieve identification. On the one hand, an increase in the adult male unemployment rate worsens the financial condition of the family, raising the drop-out probability. On the other hand, by reducing the opportunity cost of tertiary education, an increase in the youth unemployment rate reduces the drop-out probability. Focusing on students who were enrolled at university before the Recession we are able to study the effects of the crisis on performance net of any potential effect on enrolment. We find evidence that overall, university drop-out decreased as a result of the Recession and that the probability of graduating on time increased for more motivated students.
    Keywords: academic performance, drop-out, Great Recession, unemployment
    JEL: D12 E32 J24
    Date: 2014–09
  10. By: Biais, Bruno; Heider, Florian; Hoerova, Marie
    Abstract: Derivatives activity, motivated by risk-sharing, can breed risk taking. Bad news about the risk of the asset underlying the derivative increases the expected liability of a protection seller and undermines her risk prevention incentives. This limits risk-sharing, and may create endogenous counterparty risk and contagion from news about the hedged risk to the balance sheet of protection sellers. Margin calls after bad news can improve protection sellers incentives and enhance the ability to share risk. Central clearing can provide insurance against counterparty risk but must be designed to preserve risk-prevention incentives.
    Keywords: Hedging; Insurance; Derivatives; Moral hazard; Risk management;Counterparty risk; Contagion; Central clearing; Margin requirements
    JEL: D82 G21 G22
    Date: 2014–06
  11. By: Paola Mengoli; Margherita russo
    Abstract: In this paper we discuss innovations in education, with a focus on those oriented towards knowledge-driven re-industrialisation in Europe. We first introduce the specific education needs for re- industrialisation with regard (a) to young peo-ple’s knowledge and skills in science, technology, engineering and mathematics (STEM), and (b) to specific training needs of mid-level technicians. Then we pro- pose the adoption of a context-based approach to place science and technology with- in young people’s daily lives and to promote links between science, technology and society. In particular, we propose the use of robotics labs to improve context-based approach to technology education. We suggest action-research as a feasible practice to boost bottom-up changes in teaching and learning activities, and we focus on the university initiative Officina Emilia as an exemplar of such actions, as the initiative involves university researchers, manufacturing and services companies, education agencies, civil society. The paper offers some concluding remarks on two main in-gredients that can support a more appropriate set of education and training activities to enhance knowledge-driven re-industrialisation: first, the need to allow the emer-gence of hybrid places fostering innovation, with the involvement of different agents; second, the robotics labs, among others, as a means to foster a multidiscipli-nary perspective, crucial for the new challenges that education faces in supporting re- industrialization.
    Keywords: innovation in education; knowledge driven reindustrialization in Europe; technology context-based education; robotics and innovation in education
    JEL: I21 J24 I28 R1
    Date: 2014–07

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