nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒12‒08
seventeen papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Allocation of human capital and innovation at the frontier: Firm-level evidence on Germany and the Netherlands By Bartelsmann, Eric; Dobbelaere, Sabien; Peters, Bettina
  2. Grades and Rank: Impacts of Non-Financial Incentives on Test Performance By Jalava, Nina; Joensen, Juanna Schrøter; Pellas, Elin
  3. How Selective Are Real Wage Cuts? A Micro-Analysis Using Linked Employer-Employee Data By Hirsch, Boris; Zwick, Thomas
  4. Taxation and incentives to innovate: a principal-agent approach By Diego d'Andria
  5. Outside Purchase Contracts, Human Capital and Firm Capital Structure By S. Katie Moon; Gordon M. Phillips
  6. Gender Differences in Response to Big Stakes By Ghazala Azmat; Caterina Calsamiglia; Nagore Iriberri
  7. Education and growth with learning by doing By Marconi G.; Grip A. de
  8. On the Misery of Losing Self-employment By Clemens Hetschko
  9. The Biocultural Origins of Human Capital Formation By Oded Galor; Marc Klemp
  10. The Labor Supply of Self-Employed Workers: The Choice of Working Hours in Worker Co-ops By Pencavel, John
  11. Language Proficiency of Migrants: The Relation with Job Satisfaction and Skill Matching By Hans G. Bloemen
  12. Foreign and Native-Born STEM Graduates and Innovation Intensity in the United States By Winters, John V.
  13. Broken Gears: The Value Added of Higher Education on Teachers' Academic Achievement By Balcázar, Carlos Felipe; Nopo, Hugo
  14. Long Workweeks and Strange Hours By Daniel S. Hamermesh; Elena Stancanelli
  15. Boss Competence and Worker Well-being By Artz, Benjamin; Goodall, Amanda H.; Oswald, Andrew J.
  16. The Effect of Communication Channels on Promise-Making and Promise-Keeping By Conrads, Julian; Reggiani, Tommaso
  17. Cultural Values and Decision to Work of Immigrant Women in Italy By Scoppa, Vincenzo; Stranges, Manuela

  1. By: Bartelsmann, Eric; Dobbelaere, Sabien; Peters, Bettina
    Abstract: This paper examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6,634 enterprises in Germany and 14,586 enterprises in the Netherlands over the period 2000-2008, considering 5 manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. In Germany, average innovation performance is higher in all industries, except for low-technology manufacturing, and in the Netherlands the innovation performance distributions are more dispersed. In both countries, we observe non-linearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to product innovation whereas for process innovation the most negative returns are observed in the best-performing enterprises of most industries. We find that in both countries the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity e¤ect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence suggests an interpretation of a winner-takes-all market in knowledge-intensive services.
    Keywords: Human capital,innovation,productivity,quantile regression
    JEL: C10 I20 O14 O30
    Date: 2014
  2. By: Jalava, Nina (Stockholm School of Economics); Joensen, Juanna Schrøter (Stockholm School of Economics); Pellas, Elin (Stockholm School of Economics)
    Abstract: How does effort respond to being graded and ranked? This paper examines the effects of non-financial incentives on test performance. We conduct a randomized field experiment on more than a thousand sixth graders in Swedish primary schools. Extrinsic non-financial incentives play an important role in motivating highly skilled students to exert more effort. We find significant differences in test scores between the intrinsically motivated control group and three of four extrinsically motivated treatment groups. The only treatment not increasing test performance is criterion-based grading on an A-F scale, which is the typical grading method. Test performance is significantly higher if employing rank-based grading or giving students a symbolic reward. The motivational strengths of the non- financial incentives differ across the test score distribution, across the skill distribution, with peer familiarity, and with respect to gender. Boys are only motivated by rank-based incentives, while girls are also motivated by receiving a symbolic reward. Rank-based grading and symbolic rewards tend to crowd out intrinsic motivation for students with low skills, while girls also respond less to rank-based incentives if tested with less familiar peers.
    Keywords: test-taking, performance incentives, effort, extrinsic and intrinsic motivation, randomized experiment
    JEL: I20 I21 D03 C93
    Date: 2014–08
  3. By: Hirsch, Boris (University of Erlangen-Nuremberg); Zwick, Thomas (University of Würzburg)
    Abstract: Using linked employer-employee panel data for Germany, this paper investigates whether firms implement real wage reductions in a selective manner. In line with insider-outsider and several strands of efficiency wage theory, we find strong evidence for selective wage cuts with high-productivity workers being spared even when controlling for permanent differences in firms' wage policies. In contrast to some recent contributions stressing fairness considerations, we also find that wage cuts increase wage dispersion among peers rather than narrowing it. Notably, the same selectivity pattern shows up when restricting our analysis to firms covered by collective agreements or having a works council.
    Keywords: selectivity, real wage cuts, real wage rigidity, Germany
    JEL: J30 J31
    Date: 2014–08
  4. By: Diego d'Andria (Friedrich Schiller University of Jena, DFG Research Training Group "The Economics of Innovative Change")
    Abstract: A principal-agent multitasking model is used to explore the effects of different tax schemes on innovation in a pure knowledge economy. Corporate taxes and labor income taxes can affect both the firm owner's and the employee's incentives to commit to innovative tasks, when the former compensates the latter (a manager, technical or R&D employee) by means of variable pay tied to measures of the company's success. Results point to a complementary role between "patent box" tax incentives and reductions in the tax rate levied on profit sharing schemes. This complementarity holds, albeit with different relative importance for the two tax incentives, also with non-deductible labor costs, with a stochastic innovation value coupled with a risk-averse agent, and with multiple principals competing for talented agents.
    Keywords: tax incentives for R&D, patent box, principal-agent models, multitasking models, profit sharing schemes, incentives to innovate
    JEL: H2 O31 J33
    Date: 2014–11–11
  5. By: S. Katie Moon; Gordon M. Phillips
    Abstract: We examine the impact of outside purchase contracts on firm risk and firm capital structure. We find that firms with more outside purchase contracts have less risky cash flows. Despite these less risky cash flows, firms with these contracts also have less financial leverage especially when they operate in high value-added industries. Examining firm financing decisions, we document that firms with more outside contracts are more likely to issue private securities. Our results are consistent with firms with more outside purchase contracts using less leverage to decrease the expected costs of financial distress on their explicit and implicit contracting parties.
    JEL: G31 G32 L1 L22 L23 L24
    Date: 2014–10
  6. By: Ghazala Azmat; Caterina Calsamiglia; Nagore Iriberri
    Abstract: In the psychology literature, "choking under pressure" refers to a behavioural response to an increase in the stakes. In a natural experiment, we study the gender difference in performance resulting from changes in stakes. We use detailed information on the performance of high-school students and exploit the variation in the stakes of tests, which range from 5% to 27% of the final grade. We find that female students outperform male students relatively more when the stakes are low. The gender gap disappears in tests taken at the end of high school, which count for 50% of the university entry grade.
    Keywords: Stakes, gender gaps, performance
    JEL: D03 J16 I21 C30
    Date: 2014–11
  7. By: Marconi G.; Grip A. de (ROA)
    Abstract: In this paper, we develop a general equilibrium overlapping generations model which is based on the view that education makes workers more productive by increasing their ability to learn from work experience, rather than providing skills that directly increase productivity. This assumption is discussed and compared with the dominant Mincerian view on the education-productivity relationship. One important implication of the model is that the enrolment rate to education has a negative effect on the GDP in the medium term and a positive effect in the long term. This could be an explanation for the weak empirical relationship between education and economic growth that has been found in the empirical macroeconomic literature. Conversely, for a given enrolment rate, the quality of education, as measured by workers ability to learn, has a positive effect on the GDP both in the medium and in the long term.
    Keywords: Human Capital; Skills; Occupational Choice; Labor Productivity; Macroeconomic Analyses of Economic Development; One, Two, and Multisector Growth Models;
    JEL: J24 O11 O41
    Date: 2014
  8. By: Clemens Hetschko
    Abstract: German Socio-Economic Panel data is used to show that the decrease in life satisfaction caused by an increase in the probability of losing work is higher when self-employed than when paid employed. Further estimations reveal that becoming unemployed reduces self-employed workers' satisfaction considerably more than salaried workers' satisfaction. These results indicate that losing self-employment is an even more harmful life event than losing dependent employment. Monetary and non-monetary reasons seem to account for the difference between the two types of work. Moreover, it originates from the process of losing self-employment and the consequences of unemployment rather than from advantages of self-employment.
    Keywords: life satisfaction; self-employment; probability of losing work; Unemployment; SOEP
    JEL: I31 J24 J65 L26
    Date: 2014
  9. By: Oded Galor; Marc Klemp
    Abstract: This research explores the biocultural origins of human capital formation. It presents the first evidence that moderate fecundity and thus predisposition towards investment in child quality was conducive for long-run reproductive success within the human species. Using an extensive genealogical record for nearly half a million individuals in Quebec from the sixteenth to the eighteenth centuries, the study explores the effect of fecundity on the number of descendants of early inhabitants in the subsequent four generations. The research exploits variation in the random component of the time interval between the date of first marriage and the first birth to establish that while higher fecundity is associated with a larger number of children, an intermediate level maximizes long-run reproductive success. Moreover, the observed hump-shaped effect of fecundity on long-run reproductive success reflects the negative effect of higher fecundity on the quality of each child. The finding further indicates that the optimal level of fecundity was below the population median, lending credence to the hypothesis that during the Malthusian epoch, the forces of natural selection favored individuals with lower fecundity and thus larger predisposition towards child quality, contributing to human capital formation, the onset of the demographic transition and the evolution of societies from an epoch of stagnation to sustained economic growth.
    JEL: J10 N30 O10
    Date: 2014–09
  10. By: Pencavel, John (Stanford University)
    Abstract: Workers in cooperatives are self-employed workers and, if they resemble employees in conventional workplaces, they care about the length of their working hours. In this paper, their choice of hours is characterized as a conventional labor supply decision and a familiar hours-wage relationship is derived. This is estimated using mill-year observations on the plywood co-ops in the Pacific Northwest. The results are compared with those from the work behavior of other self-employed workers and with working hours in capitalist plywood mills.
    Keywords: labor supply, hours, worker co-ops
    JEL: J22 J54
    Date: 2014–10
  11. By: Hans G. Bloemen (VU University Amsterdam)
    Abstract: We empirically analyze the language proficiency of migrants in the Netherlands. Traditionally, the emphasis in studying language proficiency and economic outcomes has been on the relation between earnings and indicators for language proficiency, motivated by the human capital theory. Here we analyze whether there is a relation between proficiency of the destination language and job level. A lack of language skills may induce the migrant to work in jobs of a lower level leading to lower job satisfaction. We use subjective survey information about job satisfaction and the fit between the migrant's education and skill level and the job. We also use objective information on professional level. Our estimation strategy allows for unobservable correlations between language proficiency and labour market outcomes by employing a simultaneous two equations framework which also exploits the panel nature of our data, by allowing for time persistent random effects. We use a variety of different instrumental variables, some of which are related to linguistic distance, to shed light on the robustness of the results. For men, we find evidence for a positive relationship between indicators for language proficiency and satisfaction with work type and professional level. For women, no impact of language proficiency on the level of the job can be found. Rather, women with lower proficiency levels are not selected into employment in the first place.
    Keywords: Skills; Occupational choice; Economics of Immigrants; Panel data models
    JEL: J15 J24 C33
    Date: 2014–11–13
  12. By: Winters, John V. (Oklahoma State University)
    Abstract: This paper examines the effects of foreign- and native-born STEM graduates and non-STEM graduates on patent intensity in U.S. metropolitan areas. I find that both native and foreign-born STEM graduates significantly increase metropolitan area patent intensity, but college graduates in non-STEM fields have a smaller and statistically insignificant effect on patenting. These findings hold for both cross-sectional OLS and 2SLS regressions. I also use time-differenced 2SLS regressions to estimate the effects of STEM-driven increases in native and foreign college graduate shares and again find that both native and foreign STEM graduates have statistically significant and economically large effects on innovation. Together these results suggest that policies that increase the stocks of both foreign and native STEM graduates increase innovation and provide considerable economic benefits to regions and nations.
    Keywords: STEM, innovation, patents, human capital, higher education
    JEL: I25 J24 J61 O31 R12
    Date: 2014–10
  13. By: Balcázar, Carlos Felipe (World Bank); Nopo, Hugo (Inter-American Development Bank)
    Abstract: A growing literature establishes that good teachers are essential for high quality educational systems. However, little is known about teachers' skills formation during their college years. In this paper we use a novel panel data set combining two standardized tests for Colombian students: one that is taken at the end of senior year in high school and the other when students are near graduation from college. Accounting for selection into majors we test for the extent to which education majors relatively improve or deteriorate their skills in comparison to students in other programs. We analyze three sets of skills: quantitative reasoning, native language (Spanish) and foreign language (English). After around 5 years of college, teachers' skills vis-à-vis those in other majors deteriorate in quantitative reasoning, although they deteriorate less for those in math-oriented programs. For native and foreign language we do not find evidence of robust changes in relative learning.
    Keywords: teacher performance, career choice, self-selection, relative learning mobility
    JEL: I2 I21 J24
    Date: 2014–09
  14. By: Daniel S. Hamermesh; Elena Stancanelli
    Abstract: American workweeks are long compared to other rich countries'. Much less well-known is that Americans are more likely to work at night and on weekends. We examine the relationship between these two phenomena using the American Time Use Survey and time-diary data from 5 other countries. Adjusting for demographic differences, Americans' incidence of night and weekend work would drop by about 10 percent if European workweeks prevailed. Even if no Americans worked long hours, the incidence of unusual work times in the U.S. would far exceed those in continental Europe.
    JEL: J08 J22
    Date: 2014–09
  15. By: Artz, Benjamin (University of Wisconsin, Oshkosh); Goodall, Amanda H. (Cass Business School); Oswald, Andrew J. (University of Warwick)
    Abstract: Nearly all workers have a supervisor or 'boss'. Yet there is almost no published research by economists into how bosses affect the quality of employees' lives. This study offers some of the first formal evidence. First, it is shown that a boss's technical competence is the single strongest predictor of a worker's well-being. Second, we examine equivalent instrumental-variable results. Third, we demonstrate longitudinally that even if a worker stays in the same job and workplace then a newly competent supervisor greatly improves the worker's well-being. Finally, we discuss analytical possibilities, and consider necessary future research.
    Keywords: bosses, expert leaders, leadership, job satisfaction, happiness
    JEL: I31 J28 M54
    Date: 2014–10
  16. By: Conrads, Julian (University of Cologne); Reggiani, Tommaso (University of Cologne)
    Abstract: This paper investigates the effect of different communication channels on promise-making and promise-keeping in a helping situation. Four treatments differ with respect to the communication channel employed to solicit unincentivized cooperation, i.e., face-to-face, phone call and two different sorts of computer-mediated communication. The less anonymous (face-to-face, phone) the interpersonal interaction is due to the different communication channels, the higher the propensity of an agent to make a promise. Treatment effects, however, vanish if we then look at the actual promise-keeping rates across treatments as more anonymous channels (computer-mediated) do not perform relatively worse than more direct channels.
    Keywords: promises, communication, experimental economics, organizational behavior, behavioral ethics
    JEL: D02 D83 C91
    Date: 2014–10
  17. By: Scoppa, Vincenzo (University of Calabria); Stranges, Manuela (University of Calabria)
    Abstract: We investigate the role of culture in explaining economic outcomes at individual level analyzing how cultural values from the home country affect the decision to work of immigrants in Italy, using the National Survey of Households with Immigrants. Following the “epidemiological approach”, we relate the probability of being employed in Italy for immigrant women with the female labor force participation (LFP) in their country of origin, taken as a proxy of cultural heritage and gender role model. Controlling for a number of individual and household characteristics, we show that participation in the labor market is affected both by the culture of females' and by their husband's origin countries. We also show that the relationship between own decisions in the host country and home country LFP cannot be attributed to human capital quality or discrimination and it turns out to be stronger for immigrants that maintained more intense ties with their origin countries. Finally, we investigate to what extent cultural influence is driven by religious beliefs: we find that religion is a key determinant of differences in female labor decisions, but, besides religion, other cultural values exert additional influence.
    Keywords: culture, immigration, labor force participation, epidemiological approach, gender, Italy
    JEL: Z10 Z13 J10 J15 J16 J20
    Date: 2014–10

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