nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒02‒05
nineteen papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Cooperation in Diverse Teams: The Role of Temporary Group Membership By Grund, Christian; Harbring, Christine; Thommes, Kirsten
  2. Employee stock purchase plans – gift or incentive? evidence from a multinational corporation By Alex Bryson; Richard B. Freeman
  3. Explaining the evolution of educational attainment in the U.S. By CASTRO, Rui; COEN-PIRANI, Daniele
  4. IT and management in America By Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
  5. Managerial Incentive Problems and Return Distributions By Szalay, Dezso; Yokeeswaran, Venuga
  6. Motivating knowledge agents: can incentive pay overcome social distance? By Erlend Berg; R Manjula
  7. Management of bureaucrats and public service delivery: evidence from the Nigerian civil service By Imran Rasul; Daniel Rogger
  8. Teachers and performance pay in 2014: first results of a survey By David Marsden
  9. The Impact of Short Term Exposure to Ambient Air Pollution on Cognitive Performance and Human Capital Formation By Ebenstein, Avraham; Lavy, Victor; Roth, Sefi
  10. Your loss is my gain: a recruitment experiment with framed incentives By Jonathan de Quidt
  11. Gender differences in response to big stakes By Ghazala Azmat; Caterina Calsamiglia; Nagore Iriberri
  12. Misallocation of Human Capital and the Wealth of Nations By David Lagakos; Junichi Fujimoto
  13. Gender and the labor market: what have we learned from field and lab experiments? By Ghazala Azmat; Barbara Petrongolo
  14. Job Displacement Risk and Severance Pay By Marco Cozzi; Giulio Fella
  15. Performance Standards and Employee Effort: Evidence from Teacher Absences By Seth Gershenson
  16. Why Are There So Few Women in Executive Positions? An Analysis of Gender Differences in the Life-Cycle of Executive Employment By Frederiksen, Anders; Halliday, Timothy J.
  17. Female labour supply, human capital and welfare reform By Richard Blundell; Costas Meghir; Jonathan Shaw; Monica Costa Dias
  18. Paying out and crowding out? The globalisation of higher education By Stephen Machin; Richard Murphy
  19. Making do with less: working harder during recessions By Edward P. Lazear; Kathryn L. Shaw; Christopher Stanton

  1. By: Grund, Christian (RWTH Aachen University); Harbring, Christine (RWTH Aachen University); Thommes, Kirsten (RWTH Aachen University)
    Abstract: In organizations, some team members are assigned to a team for a predefined short period of time, e.g., as they have a temporary contract, while others are permanent members of the same team. In a laboratory experiment we analyze the cooperation levels resulting from diverse teams, where some team members remain with a team and others are switching teams. Our results reveal that teams consisting partly of members with temporary membership display a lower productivity compared to teams of permanent team members only. First, temporary team members cooperate less than permanent team members. Second, individual effort decisions increase with the number of team mates who are of the same type. This second effect holds for both temps and permanents. We argue that social identity is affected by team composition and the individuals' role in a team.
    Keywords: cooperation, economic experiment, public good, team
    JEL: C9 M5
    Date: 2015–01
  2. By: Alex Bryson; Richard B. Freeman
    Abstract: Many large listed firms offer workers the opportunity to buy shares in the firm at discounted rates through employee stock purchase plans (ESPP). The discounted rate creates a gift exchange, where the firm hopes that workers who accept the gift reciprocate with greater loyalty and effort. But ESPPs diverge from standard gift exchange or efficiency wage models. Employees have to invest some of their own money by purchasing shares at the discounted rate to accept the gift. A sizeable number choose to reject the gift. In addition, the value of the ESPP gift varies with the share price and thus with the performance of the firm and the effort of workers in total. For workers who buy subsidized shares, an ESPP sets up a group incentive pay system analogous to profit sharing, all-employee stock options, or an employment ownership scheme that makes part of workers' compensation depend on company performance.
    Keywords: Share ownership; job search; quits; sickness absence; effort; gift exchange; incentives
    JEL: J24 J33 J54 J63 M52
    Date: 2014–09
  3. By: CASTRO, Rui; COEN-PIRANI, Daniele
    Abstract: We study the evolution of educational attainment of the 1932–1972 cohorts using a calibrated model of investment in human capital with heterogeneous learning ability. The inter-cohort variation in schooling is driven by changes in skill prices, tuition, and education quality over time, and average learning ability across cohorts. A version of the model with static expectations is successful in accounting for the main patterns in the data. Rising skill prices for college explain the rapid increase in college graduation till the 1948 cohort. The measured decline in average learning ability contributes to explain the stagnation in college graduation between the 1948 and 1972 cohorts.
    Keywords: Educational attainment; human capital; skill prices; inequality; cohorts
    JEL: I24 J24 J31 O11
    Date: 2014
  4. By: Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
    Abstract: The Census Bureau recently conducted a survey of management practices in over 30,000 plants across the US, the first large-scale survey of management in America. Analyzing these data reveals several striking results. First, more structured management practices are tightly linked to higher levels of IT intensity in terms of a higher expenditure on IT and more on-line sales. Likewise, more structured management is strongly linked with superior performance: establishments adopting more structured practices for performance monitoring, target setting and incentives enjoy greater productivity and profitability, higher rates of innovation and faster employment growth. Second, there is a substantial dispersion of management practices across the establishments. We find that 18% of establishments have adopted at least 75% of these more structured management practices, while 27% of establishments adopted less than 50% of these. Third, more structured management practices are more likely to be found in establishments that export, who are larger (or are part of bigger firms), and have more educated employees. Establishments in the South and Midwest have more structured practices on average than those in the Northeast and West. Finally, we find adoption of structured management practices has increased between 2005 and 2010 for surviving establishments, particularly for those practices involving data collection and analysis.
    Keywords: IT; Management; Productivity; Organization
    JEL: M1
    Date: 2014–02
  5. By: Szalay, Dezso; 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; multidimensional heterogeneity; multidimensional screening
    JEL: D82 J33
    Date: 2014–12
  6. By: Erlend Berg; R Manjula
    Abstract: This paper studies the interaction of incentive pay and social distance in the dissemination of information. We analyse theoretically as well as empirically the effect of incentive pay when agents have pro-social objectives, but also preferences over dealing with one social group relative to another. In a randomised field experiment undertaken across 151 villages in South India, local agents were hired to spread information about a public health insurance programme. Relative to at pay, incentive pay improves knowledge transmission to households that are socially distant from the agent, but not to households similar to the agent.
    Keywords: public services; information constraints; incentive pay; social proximity; knowledge transmission
    JEL: N0
    Date: 2013–03–29
  7. By: Imran Rasul; Daniel Rogger
    Abstract: We study how the management practices that bureaucrats operate under, correlate to the quantity and quality of public services delivered. We do so in a developing country context, exploiting data from the Nigerian Civil Service linking public sector organizations to the projects they are responsible for. For each of 4700 projects, we have hand coded independent engineering assessments of each project’s completion rate and delivered quality. We supple- ment this information with a survey to elicit management practices for bureaucrats in the 63 civil service organizations responsible for these projects, following the approach of Bloom and Van Reenen[2007]. Management practices matter: a one standard deviation increase in autonomy for bureaucrats corresponds to significantly higher project completion rates of 18%; a one standard deviation increase in practices related to incentives and monitoring corresponds to significantly lower project completion rates of 14%. We provide evidence that the negative impacts of practices related to incentive provision/monitoring arise because bureaucrats multi-task and incentives are poorly targeted, and because these management practices capture elements of subjective performance evaluation that further leave scope for dysfunctional responses from bureaucrats. The backdrop to these results, where 38% of projects are never started, implies there are potentially large gains to marginally changing management practices for bureaucrats.
    Keywords: autonomy; bureaucracy; multi-tasking; performance evaluation
    JEL: J1 J50
    Date: 2013–10
  8. By: David Marsden
    JEL: R14 J01
    Date: 2014–07
  9. By: Ebenstein, Avraham; Lavy, Victor; Roth, Sefi
    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.
    Date: 2014–12
  10. By: Jonathan de Quidt
    Abstract: Empirically, labor contracts that financially penalize failure induce higher effort provision than economically identical contracts presented as paying a bonus for success, an effect attributed to loss aversion. This is puzzling, as penalties are infrequently used in practice. The most obvious explanation is selection: loss averse agents are unwilling to accept such contracts. I formalize this intuition, then run an experiment to test it. Surprisingly, I find that workers were 25 percent more likely to accept penalty contracts, with no evidence of adverse or advantageous selection. Consistent with the existing literature, penalty contracts also increased performance on the job by 0.2 standard deviations. I outline extensions to the basic theory that are consistent with the main results, but argue that more research is needed on the long-term effects of penalty contracts if we want to understand why firms seem unwilling to use them.
    Keywords: loss aversion; reference points; framing; selection; mechanical turk
    JEL: J1
    Date: 2014–04–02
  11. 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: C30 I21 J16
    Date: 2014–11
  12. By: David Lagakos (University of California, San Diego); Junichi Fujimoto (University of Tokyo)
    Abstract: In this paper we assess the role of human capital misallocation in explaining cross-country income differences. To do so we build a model of human capital accumulation by heterogeneous families that differ along two dimensions: learning ability of the children and income of the parents. Misallocation arises whenever two children with identical learning ability have different levels of inputs put towards acquiring human capital. To discipline the quantitative importance of human capital misallocation, we draw on rich household-level data for a large set of countries around the world. These data allow us to measure, among other statistics, school attendance rates of children by parental income level, by country. Preliminary results suggest that misallocation of human capital leads to substantially lower average income.
    Date: 2014
  13. By: Ghazala Azmat; Barbara Petrongolo
    Abstract: We discuss the contribution of the experimental literature to the understanding of both traditional and previously unexplored dimensions of gender differences and discuss their bearings on labor market outcomes. Experiments have offered new findings on gender discrimination, and while they have identified a bias against hiring women in some labor market segments, the discrimination detected in field experiments is less pervasive than that implied by the regression approach. Experiments have also offered new insights into gender differences in preferences: to gain less from negotiation, women appear to have lower preferences than men for risk and competition and may be more sensitive to social cues. These gender differences in preferences also have implications in group settings, whereby the gender composition of a group affects team decisions and performance. Most of the evidence on gender traits comes from the lab, and key open questions remain as to the source of gender preferences—nature versus nurture, or their interaction—and their role, if any, in the workplace.
    Keywords: gender; field experiments; lab experiments; discrimination; gender preferences
    JEL: J01 J16
    Date: 2014–03
  14. By: Marco Cozzi (Queen's University); Giulio Fella (Queen Mary)
    Abstract: This paper is a quantitative, equilibrium study of the insurance role of severance pay when workers face displacement risk and markets are incomplete. A key feature of our model is that, in line with an established empirical literature, job displacement entails a persistent fall in earnings upon reemployment due to the loss of job-specific human capital. The model is solved numerically and calibrated to the US economy. In contrast to previous studies that have analyzed severance payments in the absence of persistent earning losses, we find that the welfare gains from the insurance against job displacement afforded by severance pay are sizable. These gains are higher if, as in most OECD countries, severance pay increases with tenure. The result is a consequence of the higher persistence of earnings losses for workers with a larger stock of job-specific human capital at the time of displacement.
    Keywords: Severance Payments, Incomplete Markets, Welfare
    JEL: E24 D52 D58 J65
    Date: 2015–01
  15. By: Seth Gershenson (American University)
    Abstract: The 2001 No Child Left Behind Act (NCLB) increased accountability pressure in U.S. public schools by threatening to impose sanctions on Title 1 schools that failed to make adequate yearly progress (AYP) in consecutive years. Difference-in-difference estimates of the effect of failing AYP in the first year of NCLB on teacher effort in the subsequent year suggest that, on average, teacher absences in North Carolina fell by about 10 percent, and the probability of being absent 15 or more times fell by about 30 percent. Reductions in teacher absences were driven by within-teacher increases in effort and were larger among more effective teachers.
    Keywords: Performance standards,employee effort, teacher absences, accountability No Child Left Behind
    JEL: J45 J48 J22 I2
    Date: 2015–01
  16. By: Frederiksen, Anders (Aarhus University); Halliday, Timothy J. (University of Hawaii at Manoa)
    Abstract: "Glass ceilings" and "sticky floors" are typical explanations for the low representation of women in top executive positions, but a focus on gender differences in promotions provides only a partial explanation. We consider the life-cycle of executive employment, which allows for a full characterization of the gender composition of executive management. We establish that there are few women in executive management because they have lower levels of human capital, are underrepresented in lower-level jobs, and are less likely to be perceived as high-productivity employees. We do not find that women have uniformly unfavorable promotion and demotion probabilities.
    Keywords: discrimination, dynamics, gender
    JEL: J71 J62
    Date: 2015–01
  17. By: Richard Blundell; Costas Meghir; Jonathan Shaw; Monica Costa Dias
    Abstract: We consider the impact of tax credits and income support programs on female education choice, employment,hours and human capital accumulation over the life-cycle. We analyze both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings,we quantify the insurance value of alternative programs. We find important incentive effects on education choice and labor supply, with single mothers having the most elastic labor supply. Returns to labor market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education. For those with lower education the welfare programs are shown to have substantial insurance value. Based on the model, marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group.
    JEL: J1
    Date: 2013–04
  18. By: Stephen Machin; Richard Murphy
    Abstract: We investigate the rapid influx of overseas students into UK higher education and the impact on the number of domestic students. Using administrative data since 1994/5, we find no evidence of crowd out of domestic undergraduate students and indications of increases in the domestic numbers of postgraduate students as overseas enrolments have grown. We interpret this as a cross-subsidisation and establish causal findings using two methods. Firstly, we use the historical share of students from a sending country attending a university department as a shift-share instrument to predict enrolment patterns. Secondly, we use a change in Chinese visa regulations and exchange rates in combination with strong subject preferences as a predictor of overseas student growth.
    Keywords: Overseas students; crowding out
    JEL: I20 I21 I28
    Date: 2014–09
  19. By: Edward P. Lazear; Kathryn L. Shaw; Christopher Stanton
    Abstract: Why did productivity rise during recent recessions? One possibility is that average worker quality increased. A second is that each incumbent worker produced more. The second effect is termed “making do with less.” Using data from 2006 to 2010 on individual worker productivity from a large firm, these effects can be measured and separated. For this firm, most of the gain in productivity during the recession was a result of increased effort. Additionally, the increase in effort is correlated with the increase in the local unemployment rate, presumably reflecting the costs of losing a job.
    Keywords: Recession; productivity; sorting
    JEL: D20 E32 L22 M50
    Date: 2014–12

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