nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2014‒12‒19
fourteen papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Trade in Tasks and the Organization of Firms By Marin, Dalia; Schymik, Jan; Tarasov, Alexander
  2. Vacation Leave, Work Hours and Wages: New Evidence from Linked Employer-Employee Data By Fakih, Ali
  3. The Impact of Short Term Exposure to Ambient Air Pollution on Cognitive Performance and Human Capital Formation By Victor Lavy; Avraham Ebenstein; Sefi Roth
  4. Do Female Executives Make a Difference? The Impact of Female Leadership on Gender Gaps and Firm Performance By Flabbi, Luca; Macis, Mario; Moro, Andrea; Schivardi, Fabiano
  5. Performance Pay, Competitiveness, and the Gender Wage Gap: Evidence from the United States By McGee, Andrew; McGee, Peter; Pan, Jessica
  6. The Value of Informativeness for Contracting By Pierre Chaigneau; Alex Edmans; Daniel Gottlieb
  7. Are two heads better than one head in managing the farm business? By Tauer, Loren
  8. Intrinsic Motivation in Public Service: Theory and Evidence from State Supreme Courts By Elliott Ash; W. Bentley MacLeod
  9. Combining technology and work organization: An analysis of complementarity between IT and decentralization across firms of different size By Rasel, Fabienne
  10. The return to college: Selection and dropout risk By Hendricks, Lutz; Leukhina, Oksana
  11. Happiness and Work By Krause, Annabelle
  12. Collaborating With People Like Me: Ethnic Co-authorship within the US By Freeman, Richard B.; Huang, Wei
  13. Determinants of students' success at university By Danilowicz-Gösele, Kamila; Meya, Johannes; Schwager, Robert; Suntheim, Katharina
  14. Inheritance law reform, empowerment, and human capital accumulation : second-generation effects from India By Deininger, Klaus; Xia, Fang; Jin, Songqing; Nagarajan, Hari K.

  1. By: Marin, Dalia; Schymik, Jan; Tarasov, Alexander
    Abstract: We incorporate trade in tasks à la Grossman and Rossi-Hansberg (2008) into a small open economy version of the theory of firm organization of Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that the offshoring of production tasks leads firms to reorganize with a more decentralized management, improving the competitiveness of the offshoring firms. We show further that the offshoring of managerial tasks relaxes the constraint on managers but toughens competition, and thus has an ambiguous impact on the level of decentralized management and CEO wages of the offshoring firms. In sufficiently open economies, however, managerial offshoring unambiguously leads to more decentralized management and to larger CEO wages. We test the predictions of the model based on original firm level data we designed and collected of 660 Austrian and German multinational firms with 2200 subsidiaries in Eastern Europe. We find that offshoring firms are 33.4% more decentralized than non-offshoring firms. We find further that the average fraction of managers offshored reduces the level of decentralized management by 3.1%, but increases the level of decentralized management by 4% in industries with a level of openness above the 25th percentile of the openness distribution. Lastly, we find that one additional offshored manager lowers CEO wages relative to workers by 4.9%.
    Keywords: international trade with endogenous organizations; the rise of human capital; theory of the firm; multinational firms; CEO pay
    JEL: F12 F14 L22 D23
    Date: 2014–10
  2. By: Fakih, Ali (Lebanese American University)
    Abstract: This paper provides new evidence on the determinants of vacation leave and its relationship to hours worked and hourly wages by examining the case of Canada. Previous studies from the US, using individual level data, have revealed that annual work hours fall by around 53 hours for each additional week of vacation used. Exploiting a linked employer-employee dataset that allows to control for detailed observed demographic, job, and firm characteristics, we find instead that annual hours of work fall by only 29 hours for each additional week of vacation used. Our findings support the hypothesis that pressure at work may lead employees to use more vacation days, but also causes them to work for longer hours.
    Keywords: paid vacation leave, used vacation leave, work hours, wages, linked employer-employee data
    JEL: J22 M52
    Date: 2014–09
  3. By: Victor Lavy; Avraham Ebenstein; Sefi Roth
    Abstract: Cognitive performance is critical to productivity in many occupations and potentially linked to pollution exposure. We evaluate this potentially important relationship by estimating the effect of pollution exposure on standardized test scores among Israeli high school high-stakes tests (2000-2002). Since students take multiple exams on multiple days in the same location after each grade, we can adopt a fixed effects strategy estimating models with city, school, and student fixed effects. We focus on fine particulate matter (PM2.5) and carbon monoxide (CO), which are considered to be two of the most dangerous forms of air pollution. We find that while PM2.5 and CO levels are only weakly correlated with each other, both exhibit a robust negative relationship with test scores. We also find that PM2.5, which is thought to be particularly damaging for asthmatics, has a larger negative impact on groups with higher rates of asthma. For CO, which affects neurological functioning, the effect is more homogenous across demographic groups. Furthermore, we find that exposure to either pollutant is associated with a significant decline in the probability of not receiving a Bagrut certificate, which is required for college entrance in Israel. The results suggest that the gain from improving air quality may be underestimated by a narrow focus on health impacts. Insofar as air pollution may lead to reduced cognitive performance, the consequences of pollution may be relevant for a variety of everyday activities that require mental acuity. Moreover, by temporarily lowering the productivity of human capital, high pollution levels lead to allocative inefficiency as students with lower human capital are assigned a higher rank than their more qualified peers. This may lead to inefficient allocation of workers across occupations, and possibly a less productive workforce.
    JEL: I21 J24
    Date: 2014–10
  4. By: Flabbi, Luca (Inter-American Development Bank); Macis, Mario (Johns Hopkins University); Moro, Andrea (Vanderbilt University); Schivardi, Fabiano (Bocconi University)
    Abstract: We analyze a matched employer-employee panel data set and find that female leadership has a positive effect on female wages at the top of the distribution, and a negative one at the bottom. Moreover, performance in firms with female leadership increases with the share of female workers. This evidence is consistent with a model where female executives are better equipped at interpreting signals of productivity from female workers. This suggests substantial costs of under-representation of women at the top: for example, if women became CEOs of firms with at least 20% female employment, sales per worker would increase 6.7%.
    Keywords: executives' gender, gender gap, firm performance, glass ceiling, statistical discrimination
    JEL: M5 M12 J7 J16
    Date: 2014–10
  5. By: McGee, Andrew (Simon Fraser University); McGee, Peter (National University of Singapore); Pan, Jessica (National University of Singapore)
    Abstract: Evidence that women are less likely to opt into competitive compensation schemes in the laboratory has generated speculation that a gender difference in competitiveness contributes to the gender wage gap. Using data from the NLSY79 and NLSY97, we show that women are less likely to be employed in jobs using competitive compensation. The portion of the gender wage gap explained by gender segregation in compensation schemes is small in the NLSY79 but somewhat larger in the NLSY97 – suggesting an increasing role for competitiveness in explaining the gender wage gap.
    Keywords: gender wage gap, competitiveness, performance pay
    JEL: J16 A12
    Date: 2014–10
  6. By: Pierre Chaigneau; Alex Edmans; Daniel Gottlieb
    Abstract: The informativeness principle demonstrates qualitative benefits to increasing signal precision. However, it is difficult to quantify these benefits -- and compare them against the costs of precision -- since we typically cannot solve for the optimal contract and analyze how it changes with informativeness. We consider a standard agency model with risk-neutrality and limited liability, where the optimal contract is a call option. The direct effect of reducing signal volatility is a fall in the value of the option, benefiting the principal. The indirect effect is a change in the agent's effort incentives. If the original option is sufficiently out-of-the-money, the agent can only beat the strike price if he exerts effort and there is a high noise realization. Thus, a fall in volatility reduces effort incentives. As the agency problem weakens, the gains from precision fall towards zero, potentially justifying pay-for-luck.
    JEL: D86 J33
    Date: 2014–10
  7. By: Tauer, Loren
    Abstract: The objective was to compare the performance of farms that have more than one self-identified manager to the performance of similar farms with only one self-identified manager. The question to be answered is whether more managers enhance the performance of the farm. The technique used is a matching technique to compare similar farms which only vary in whether they have only one or more than one manager. The data set used was the New York Dairy Farm Business Summary data from the years 1998 through 2011. The partnerships as a group did not display higher or lower returns to labor and management income per operator compared to the sole proprietorships. A comparison of parent-child partnerships to non-parent-child partnerships resulted in the non-parent-child partnerships showing $36,442 more labor and management income per manager. The conclusion is that two or more heads for management are better than one head for management, as long as the two heads does not include a parent and child. The results suggest that further data collection and studies that explores the management styles and practices of the non-family partnerships as compared to the family partnerships is warranted.
    Keywords: Business partnerships, economies of management, family businesses, matching samples, return to management, Agricultural Finance, Farm Management, Labor and Human Capital, L25, L26, M10, M21, Q12,
    Date: 2014
  8. By: Elliott Ash; W. Bentley MacLeod
    Abstract: This paper provides a theoretical and empirical analysis of the intrinsic preferences of state appellate court judges. We construct a panel data set using published decisions from state supreme court cases merged with institutional and biographical information on all (1,700) state supreme court judges for the 50 states of the United States from 1947 to 1994. We exploit variation in the employment conditions of judges over this period of time to measure the effect of these changes on a number of measures of judicial performance. The results are consistent with the hypothesis that judges are intrinsically motivated to provide high-quality decisions, and that at the margin they prefer quality over quantity. When judges face less time pressure, they write more well-researched opinions that are cited more often by later judges. When judges are up for election then performance falls, consistent with the hypothesis that election politics is time-consuming. These effects are strongest when judges have more discretion to select their case portfolio, consistent with psychological theories that posit a negative effect of contingency on motivation (e.g. Deci, 1971). Finally, the intrinsic preference for quality appears to be higher among judges selected by non-partisan elections than among those selected by partisan elections.
    JEL: J3 J33 J44 J45
    Date: 2014–11
  9. By: Rasel, Fabienne
    Abstract: This paper examines whether information technology (IT) and decentralized work organization are complementary only for large firms or also for smaller firms. Empirical evidence, which suggests complementarity between IT and decentralization, is mainly based on large firms. Using data from a sample of 3292 SMEs and of 598 larger firms from the manufacturing and service sector in Germany, I can observe firms' IT intensity in terms of enterprise software and computer use and whether firms have a decentralized work organization. I find that SMEs with decentralized work practices tend to use IT more intensively. Moreover, for the sample of SMEs, IT and decentralized work organization are individually associated with higher productivity but the combination of IT and decentralization does not yield a productivity premium. Contrarily, for the sample of larger firms, the results show that the productivity of IT depends positively on decentralization. The findings suggest that combining IT and decentralized work organization seems to be a successful strategy only for larger firms.
    Keywords: information technology,decentralized work organization,complementarity,productivity,enterprise software,firm-level data
    JEL: D22 D24 L20 O33
    Date: 2014
  10. By: Hendricks, Lutz; Leukhina, Oksana
    Abstract: This paper studies the effect of graduating from college on lifetime earnings. We develop a quantitative model of college choice with uncertain graduation. Departing from much of the literature, we model in detail how students progress through college. This allows us to parameterize the model using transcript data. College transcripts reveal substantial and persistent heterogeneity in students' credit accumulation rates that are strongly related to graduation outcomes. From this data, the model infers a large ability gap between college graduates and high school graduates that accounts for 54% of the college lifetime earnings premium.
    Keywords: Education,College premium,College dropout risk
    JEL: E24 J24 I21
    Date: 2014
  11. By: Krause, Annabelle (IZA)
    Abstract: The relationship between happiness and work is subject to an ever growing empirical literature in economics. The analyses are mostly based on large-scale survey data to measure subjective well-being. Whereas one large strand of research investigates the effect of job loss and becoming unemployed, another field of study focuses on the determinants of job satisfaction evolving around employment conditions, self-employment, and potential public sector satisfaction premiums. A smaller part of the literature investigates potential driving effects of happiness on labor market outcomes. This article will give an overview about the most significant subareas of research and the empirical literature in economics to date.
    Keywords: life satisfaction, happiness, anticipation and adaptation effects, employment conditions, self-employment, unemployment, work, job satisfaction, subjective well-being
    JEL: I31 J28 J60 J64
    Date: 2014–08
  12. By: Freeman, Richard B. (Harvard University); Huang, Wei (Harvard University)
    Abstract: This study examines the ethnic identity of authors in over 2.5 million scientific papers written by US-based authors from 1985 to 2008, a period in which the frequency of English and European names among authors fell relative to the frequency of names from China and other developing countries. We find that persons of similar ethnicity co-author together more frequently than predicted by their proportion among authors. Using a measure of homophily for individual papers, we find that greater homophily is associated with publication in lower impact journals and with fewer citations, even holding fixed the authors' previous publishing performance. By contrast, papers with authors in more locations and with longer reference lists get published in higher impact journals and receive more citations than others. These findings suggest that diversity in inputs by author ethnicity, location, and references leads to greater contributions to science as measured by impact factors and citations.
    Keywords: homophily, impact factor, citations
    JEL: D8 F22 J24
    Date: 2014–08
  13. By: Danilowicz-Gösele, Kamila; Meya, Johannes; Schwager, Robert; Suntheim, Katharina
    Abstract: This paper studies the determinants of academic success using a unique administrative data set of a German university. We show that high school grades are strongly associated with both graduation probabilities and final grades, whereas variables measuring social origin or income have only a smaller impact. Moreover, the link between high school performance and university success is shown to vary substantially across faculties. In some fields of study, the probability of graduating is rather low, while grades are quite good conditional on high school performance. In others, weaker students have a greater chance of graduating, but grades are more differentiated.
    Keywords: university,high school,grade point average,faculties,education
    JEL: I23 I21
    Date: 2014
  14. By: Deininger, Klaus; Xia, Fang; Jin, Songqing; Nagarajan, Hari K.
    Abstract: This paper uses evidence from three Indian states, one of which amended inheritance legislation in 1994, to assess first- and second-generation effects of inheritance reform using a triple-difference strategy. Second-generation effects on education, time use, and health are larger and more significant than first-generation effects even controlling for mothers'endowments. Improved access to bank accounts and sanitation as well as lower fertility in the parent generation suggest that inheritance reform empowered females in a sustainable way, a notion supported by significantly higher female survival rates.
    Keywords: Population Policies,Gender and Law,Gender and Health,Population&Development,Housing&Human Habitats
    Date: 2014–11–01

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