nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒01‒03
eighteen papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Diversified experience, benefits to the individual and the firm By Mikaela Backman; Maureen Kilkenny
  2. Attracting international research professionals to EU smart regions: evidence from Tuscany. By Katerina Stancova
  3. Northern Investment Risks in Human Capital Formation: Russian Experience By Elena Kotyrlo
  4. The impact of knowledge spillovers on regional total factor productivity. New empirical evidence from selected European countries By Paula Puskarova; Philipp Piribauer
  5. How to woo the smart ones? Evaluating the determinants that particularly attract highly qualified people to cities By Buch, Tanja; Hamann, Silke; Niebuhr, Annekatrin; Rossen, Anja
  6. Money talks: Paying physicians for performance By Keser, Claudia; Peterle, Emmanuel; Schnitzler, Cornelius
  7. University research alliances, absorptive capacity, and the contribution of startups to employment growths By Toole, Andrew A.; Czarnitzki, Dirk; Rammer, Christian
  8. Knowing that you matter, matters! The interplay of meaning, monetary incentives, and worker recognition By Kosfeld, Michael; Neckermann, Susanne; Yang, Xiaolan
  9. Human capital development, knowledge spillovers and local growth: Is there a quality effect of university efficiency? By Zotti, Roberto; Barra, Cristian
  10. Taxing Top Earners: A Human Capital Perspective By Alejandro Bladel; Mark Huggett
  11. Incentives, behavioral biases, and risk taking By Pikulina, E.S.
  12. Country of Origin and Immigrant Earnings, 1960-2000: A Human Capital Investment Perspective By Duleep, Harriet; Liu, Xingfei; Regets, Mark
  13. Terrorism and Human Capital at Birth: Bomb Casualties and Birth Outcomes in Spain By Quintana-Domeque, Climent; Ródenas-Serrano, Pedro
  14. Using artefactual field and lab experiments to investigate how fee-for-service and capitation affect medical service provision By Brosig-Koch , Jeannette; Hennig-Schmidt , Heike; Kairies-Schwarz, Nadja; Wiesen, Daniel
  15. Human Capital and Optimal Redistribution By Koeniger, Winfried; Prat, Julien
  16. The new empirical economics of management By Bloom, Nicholas; Lemos, Renata; Sadun, Raffaella; Scur, Daniela; Van Reenen, John
  17. Equity Vesting and Managerial Myopia By Edmans, Alex; Fang, Vivian; Lewellen, Katharina A.
  18. Managerial Incentive Problems and Return Distributions By Szalay, Dezsö; Yokeeswaran, Venuga

  1. By: Mikaela Backman; Maureen Kilkenny
    Abstract: This paper analyse how previous experience and affiliation influence individual employees but also the current employers. Knowledge can be embodied in several different forms, in individuals, in books, in machines, or in processes. Human capital refers to embodied knowledge in individuals, comprising qualifications acquired through education, experience, skills acquired through learning by doing and training, inherited abilities, ethics, and habits. Individuals are in this setting knowledge carriers and since an individual cannot be separated from these characteristics the knowledge can therefore not be sold or used as collateral. The diffusion of human capital is thereby determined by the individual's mobility across locations and firms. Disembodied knowledge on the other hand arises because of knowledge spillovers and positive externalities. This paper focus on the diffusion of knowledge through the inter-firm, inter-region and inter-sectoral mobility. This has to the authors knowledge not been analysed this systematic before. Hence, this paper investigate the existence, much less the effects of "brain circulation", the mode of knowledge transfer between firms in regions and the benefits of regional workforce density and localization economies. The empirical design is based on employer-employee matched data covering most active firms and individuals in Sweden over the time period 1990 to 2010. The experience of each individual is identified by tracking the individual over the last ten years (from 2001). Experience is defined in abroad context where the scale and scope of previous establishments, firms, geographical locations and sectors are used. We test how these previous experiences benefit the individual in terms of higher wages but also how it influence the current employer. The effect on the employer is measured through the firms productivity, profitability and the ability to be innovative. By having this broad definition of experience we can decipher if it is the diversified experience in terms of number of establishments, firms, locations or the sectors that is beneficial for the individual respectively the firm. Hence, we can analyse if individuals that change employers, locations and even jump between different sectors benefit and if firms should focus on hiring individuals that have a large experience and what type of experience that is beneficial.
    Keywords: affiliation; network; diversified experience; employer-employee data JEL-codes:
    JEL: D21 D22 D85 J24 J31 J62
    Date: 2014–11
  2. By: Katerina Stancova
    Abstract: Human resources is one of the main assets of the regional innovation systems. The development and accumulation of human resources is a crucial prerequisite to keep regional R&I industries highly performing and internationally competitive. Yet, regional policies to attract international research professionals (IRPs) are still underdeveloped for a number of reasons. It is crucial to understand the role of regions in managing IRP migration, as well as factors and obstacles to IRP immigration in order to design effective policy measures. It is argued that the factors that influence the size, composition and distribution of IRPs within a territory are place-based, and they are structural (organisational, policy-related and economic) as well as non-pecuniary (professional, personal, cultural, lifestyle preferences). The framework is interrogated via a case study of Tuscany. Particular attention is paid to organisational, policy-related, economic and human factors. The paper concludes by offering a discussion of policies to be implemented at different levels of governance to improve attraction and recruitment potential, and to achieve the ultimate goal of sustainable management of regional research capacities.
    Date: 2014–11
  3. By: Elena Kotyrlo
    Abstract: Historically, the northern Russian regions have been an object of a special socio-economic policy, united by extreme climate conditions, geographical isolation and rich natural resources reserves. Northern investment risks in human capital formation are proposed in the paper, as an indicator of investment conditions, which can be employed to improve policy of human development in the northern regions of Russia. Northern investment risks encompass uncertainties associated with extreme northern climate conditions, historically determined allocation of resources in the Russian northern regions and restrictions on labour mobility caused by geographic isolation and administrative rules. Investment risks in human capital, its measurement, methods of estimation are considered. Empirical estimation illustrates higher investment risks in the northern regions. Method of estimation can be employed widely to compare investment conditions in imperfect economies. Policy of insurance of private investment risks and current restrictions on it's implementation in the northern regions of Russia are discussed.
    JEL: D81 J31 J38 J78 R59
    Date: 2014–11
  4. By: Paula Puskarova; Philipp Piribauer
    Abstract: This paper aims to identify the contribution of knowledge capital and its determinant - human capital - to total factor productivity differences among regions within a regression framework in general and the impact of their spillovers on regional total factor productivity in particular. The focus is laid on interregional spillovers between the Western and Eastern EU and namely, within the triangle of capital regions Vienna-Budapest-Bratislava. The results challenge some previous empirical studies in the sense that once the human capital is accounted for, the significance and magnitude of spillovers from conventional reservoirs of knowledge - patent stocks - falls. Vienna appears to be the largest contributor to the productivity increases in Bratislava. Budapest's productivity seems to be sensitive to knowledge and human capital endowments of EU, but not those of Vienna. Keywords: knowledge capital, knowledge spillover, human capital, human capital spillover, total factor productivity, spatial panel
    Keywords: knowledge capital; knowledge spillover; human capital; human capital spillover; total factor productivity; spatial panel
    JEL: O33 O47 R12
    Date: 2014–11
  5. By: Buch, Tanja; Hamann, Silke; Niebuhr, Annekatrin; Rossen, Anja
    Abstract: Human capital is a driving factor of innovation and economic growth. Economic prospects of cities depend on high qualified workers' knowledge and therefore, attracting highly qualified workers plays a fundamental role for cities' prospects. This study contributes to the question which factors primarily determine the mobility-decision of highly qualified workers by investigating the determinants of the migration balance of German cities between 2000 and 2010. Furthermore, it compares the effects of several labour- and amenity-related variables on migration rates of highly qualified workers and the remaining workforce. Findings suggest that local labour market conditions influence the mobility decision but amenities matter too for the high-skilled. The preferences of the highly qualified workers partly differ from those of the rest of the workforce. However, there are also several factors that do not show systematic differences across skill groups.
    Keywords: migration,cities,qualification level,highly qualified,labour market conditions,amenities,Germany
    JEL: C23 J61 R23
    Date: 2014
  6. By: Keser, Claudia; Peterle, Emmanuel; Schnitzler, Cornelius
    Abstract: Pay-for-performance attempts to tie physician payment to quality of care. In a controlled laboratory experiment, we investigate the effect of pay-for-performance on physician provision behavior and patient benefit. For that purpose, we compare a traditional fee-for-service payment system to a hybrid system that blends fee-for-service and pay-for-performance incentives. Physicians are found to respond to pay-for-performance incentives. Approximately 89 percent of the participants qualify for a pay-for-performance bonus payment in the experiment. It follows that a patient treated under the hybrid payment system is significantly more likely to receive optimal treatment than a similar fee-for-service patient. Pay-for-performance generally tends to alleviate over- and under-provision of medical treatment relative to fee-for-service. Irrespective of the payment system, we observe unethical treatment behavior, i.e., the provision of medical services with zero benefit to the patient.
    Keywords: experimental economics,physician remuneration,pay-for-performance (P4P)
    Date: 2014
  7. By: Toole, Andrew A.; Czarnitzki, Dirk; Rammer, Christian
    Abstract: This paper examines how university research alliances and other cooperative links with universities contribute to startup employment growth. We argue that 'scientific absorptive capacity' at the startup is critical for reaping the benefits from university research alliances, but not necessarily for other university connections. We also estimate the aggregate employment contribution from startup firms and attribute those employment gains to university research alliances and other university connections. We find significant contributions to employment growth from university research alliances and other university connections, but scientific absorptive capacity is critical for university research alliances. Only 7% of the startup population maintained a university research alliance, but among these firms, 3.4% of their total jobs created were attributable to their alliances. These results suggest university connections are quite important for job growth and university research alliances contributed substantially to job creation for those firms that had such alliances.
    Keywords: Academic Entrepreneurship,Startups,Firm performance,Technology Transfer,University Spinoff Policy,Human Capital
    JEL: L25 L26 J24
    Date: 2014
  8. By: Kosfeld, Michael; Neckermann, Susanne; Yang, Xiaolan
    Abstract: We manipulate workers' perceived meaning of a job in a field experiment. Half of the workers are informed that their job is important, the other half are told that their job is of no relevance. Results show that workers exert more effort when meaning is high, corroborating previous findings on the relationship between meaning and work effort. We then compare the effect of meaning to the effect of monetary incentives and of worker recognition via symbolic awards. We also look at interaction effects. While meaning outperforms monetary incentives, the latter have a robust positive effect on performance that is independent of meaning. In contrast, meaning and recognition have largely similar effects but interact negatively. Our results are in line with image-reward theory (Bénabou and Tirole 2006) and suggest that meaning and worker recognition operate via the same channel, namely image seeking.
    Keywords: meaning,monetary incentives,worker recognition,field experiment
    JEL: C93 J33 M12 M52
    Date: 2014
  9. By: Zotti, Roberto; Barra, Cristian
    Abstract: In this paper, we test whether economic growth depends on human capital development using data disaggregated at territorial level and propose the use of efficiency estimates, measured using a non-parametric technique, as an alternative quality measure of higher education institutions (HEIs). The nature of knowledge spillovers is also taken into account to examine the existence of geographically localized spillovers, from the presence of efficient universities, on local growth. Results show that the efficiency of universities has a positive and significant effect on GDP per worker. Moreover, we find evidence that productivity gains are larger in areas in which the most efficient universities are located, suggesting that investment in tertiary education may affect geographical distribution of economic activity as well as its level.
    Keywords: Human capital; Higher education; Knowledge spillovers; Local economic development; Non-parametric technique.
    JEL: C14 C67 I21 I23
    Date: 2014–10
  10. By: Alejandro Bladel (Federal Reserve Bank of St. Louis); Mark Huggett (Georgetown University)
    Abstract: We assess the consequences of substantially increasing the marginal tax rate on U.S. top earners using a human capital model. We nd that (1) the peak of the model Laer curve occurs at a 52 percent top tax rate, (2) if human capital were exogenous, then the top of the Laer curve would occur at a 66 percent top tax rate and (3) applying the theory and methods that Diamond and Saez (2011) use to provide quantitative guidance for setting the top tax rate to model data produces a tax rate that substantially exceeds 52 percent.
    Keywords: human capital, marginal tax rate, Inequality, Laffer curve
    JEL: D91 E21 H20 J24
    Date: 2014–11
  11. By: Pikulina, E.S. (Tilburg University, School of Economics and Management)
    Abstract: While economists believe that monetary incentives provide the most powerful motivation for individuals to undertake an activity, major schools in psychology and sociology emphasize the motives coming from within the individual and from the personal and cultural differences among individuals. This dissertation employs both approaches to investigate the effect of monetary incentives, behavioral biases (such as overconfidence), and culture on individuals' decision-making. So it can be divided in two parts. The first part of this dissertation explores the effect of different compensation schemes on risk-taking behavior and performance of proprietary traders and mutual fund managers, using an experimental setup and historical data. The second part investigates the role of overconfidence in effort and investment provision and the role of cultural background in risk-taking in experimental setting.
    Date: 2014
  12. By: Duleep, Harriet (College of William and Mary); Liu, Xingfei (IZA); Regets, Mark (National Science Foundation)
    Abstract: Using microdata from the 1960-2000 decennial censuses, this paper explores how large initial differences in immigrant earnings by country of origin change with duration in the United States. One analysis reveals that country of origin adds less to the explanation of earnings, among working-age adult male immigrants, the longer they reside in the United States. Another discovers that the earnings dispersion of demographically comparable immigrants across countries of origin diminishes with time in the United States. Both indicate convergence in immigrant earnings by country of origin. To probe the sensitivity of these results to immigrant emigration, we pursue a theoretical analysis, which gauges how hypothetical patterns of selective emigration affect the convergence results, and an empirical analysis, which could be more broadly applied as a test for emigration bias. Both suggest that immigrant earnings convergence by country of origin is not an artifact of emigration. The convergence has methodological ramifications for the measurement of immigrant economic assimilation – in studies that follow cohorts and in studies that follow individuals with longitudinal data – and more generally for the study of any process in which unmeasured variables jointly affect initial conditions and subsequent growth.
    Keywords: immigrant economic assimilation, human capital investment, country of origin, immigrant earnings convergence
    JEL: J1 J2 J3
    Date: 2014–11
  13. By: Quintana-Domeque, Climent (University of Oxford); Ródenas-Serrano, Pedro (Universidad de Alicante)
    Abstract: We study the effects of terrorism in Spain on birth outcomes, focusing on terrorism perpetrated by ETA, combining information on the number of bomb casualties from The Victims of ETA Dataset with the individual birth records from the national registry of live births in Spain, elaborated by the Spanish Statistical Institute (INE). We focus on live births conceived between January 1980 and February 2003 and find that in utero exposure to terrorism early in pregnancy, as measured by the number of bomb casualties in the mother's province of residence in the first trimester of pregnancy, has detrimental effects on birth outcomes: in terms of average birth weight (lower), prevalence of low birth weight (higher) and fraction of "normal" babies (lower). Our results are robust to a battery of checks, such as controlling for "economic" factors and accounting for spatial "spillover" effects. In addition, we investigate potential non-linear effects and explore heterogeneous effects across groups of regions, different time periods and family characteristics. In support of our identification strategy, the number of bomb casualties after birth does not predict birth outcomes. We do not find evidence of migration effects (in terms of population size responses to last year terrorist activity), but the number of still births increases with bomb casualties in the first and third trimesters of pregnancy. The estimated effect of 1 bomb casualty in the first trimester of pregnancy on average birth weight (around half a gram) is likely to be downward biased due to selective mortality. Finally, we provide a conceptual framework to understand what can be identified about the production of child health by exploiting shocks that affect (unobserved) maternal inputs.
    Keywords: terrorism, birth weight, stress, production of child health, Spain
    JEL: I12 J13
    Date: 2014–11
  14. By: Brosig-Koch , Jeannette (Faculty of Economics and Business Administration); Hennig-Schmidt , Heike (Department of Health Management and Health Economics); Kairies-Schwarz, Nadja (Faculty of Economics and Business Administration); Wiesen, Daniel (Department of Health Management and Health Economics)
    Abstract: We analyze how physicians, medical students, and non-medical students respond to nancial incentives from fee-for-service and capitation. We employ a series of artefactual eld and conventional lab experiments framed in a physician decision-making context. Physicians, participating in the eld, and medical and non-medical students, participating in lab experiments, respond to the incentives in a consistent way: Signi - cantly more medical services are provided under fee-for-service compared to capitation. Our ndings are robust regarding subjects' gender, age, and personality traits.
    Keywords: artefactual field Experiment; laboratory experiment; fee-for-service; capitation; physician behavior
    JEL: C91 I11
    Date: 2014–11–26
  15. By: Koeniger, Winfried; Prat, Julien
    Abstract: We characterize optimal redistribution in a dynastic family model with human capital. We show how a government can improve the trade-off between equality and incentives by changing the amount of observable human capital. We provide an intuitive decomposition for the wedge between human-capital investment in the laissez faire and the social optimum. This wedge differs from the wedge for bequests because human capital carries risk: its returns depend on the non-diversifiable risk of children's ability. Thus, human capital investment is encouraged more than bequests in the social optimum if human capital is a bad hedge for consumption risk.
    Keywords: human capital; optimal taxation
    JEL: E24 H21 I22 J24
    Date: 2014–11
  16. By: Bloom, Nicholas; Lemos, Renata; Sadun, Raffaella; Scur, Daniela; Van Reenen, John
    Abstract: Over the last decade the World Management Survey (WMS) has collected firm-level management practices data across multiple sectors and countries. We developed the survey to try to explain the large and persistent TFP differences across firms and countries. This review paper discusses what has been learned empirically and theoretically from the WMS and other recent work on management practices. Our preliminary results suggest that about a quarter of cross-country and within-country TFP gaps can be accounted for by management practices. Management seems to matter both qualitatively and quantitatively. Competition, governance, human capital and informational frictions help account for the variation in management.
    Keywords: management; organization; productivity
    JEL: L2 M2 O14 O32 O33
    Date: 2014–06
  17. By: Edmans, Alex; Fang, Vivian; Lewellen, Katharina A.
    Abstract: This paper links the CEO’s concerns for the current stock price to reductions in real investment. These concerns depend on the amount of equity he intends to sell in the short-term, but actual equity sales are an endogenous decision. We use the amount of stock and options scheduled to vest in a given year as an instrument for equity sales. Such vesting is determined by equity grants made several years prior, and thus unlikely driven by current investment opportunities. An interquartile increase in instrumented equity sales is associated with a decline of 0.25% in the growth of R&D/assets, 4.6% of the average R&D/assets ratio. Vesting-induced equity sales also increase the likelihood of meeting or marginally beating analyst earnings forecasts, and are associated with higher returns to earnings announcements. More broadly, by introducing a measure of incentives that is not driven by the current contracting environment – vesting-induced equity sales – our paper suggests that CEO contracts affect real outcomes.
    Keywords: CEO Incentives; Managerial Myopia; Short-Termism; Vesting
    JEL: G31 G34 M12 M52
    Date: 2014–09
  18. By: Szalay, Dezsö; Yokeeswaran, Venuga
    Abstract: We study a model of managerial incentive problems where a manager chooses the first two moments of his firm’s profit distribution - mean and volatility - along an efficient frontier. Assuming that managers differ with respect to their marginal cost of effort and their risk aversion we explore our model’s comparative statics predictions in full detail. If managers’ preference parameters are commonly known and associated, then a positive correlation between expected returns, volatility of profits, and incentives is the natural outcome. Allowing in addition for adverse selection with respect to the managers’ preference parameters does not change the predicted correlation if the variation in observed contracts is not too large. Moreover, observed incentive schemes reflect exclusion of some manager types. Neglecting the endogeneity of risk in empirical studies biases estimates towards zero.
    Keywords: Managerial incentive problems; comparative statics; multidimensional heterogeneity; multidimensional screening
    JEL: D82 J33
    Date: 2014–09–22

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