nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒02‒16
thirteen papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Timing of Kindness Evidence from a Field Experiment By Werner, Peter; Ockenfels, Axel; Sliwka, Dirk
  2. Human Capital and Optimal Redistribution By Koeniger, Winfried
  3. On the Incentive Effect of Job Rotation By Katolnik, Svetlana; Hakenes, Hendrik
  4. The Heterogeneous Effects of Bonus Pay on Performance Outcomes: Evidence from Personnel Data By Sauermann, Jan
  5. The Dark Side of Competition for Status By Gary Charness; David Masclet; Marie Claire Villeval
  6. Compensating Differentials in Experimental Labor Markets By Carpenter, Jeffrey P.; Matthews, Peter Hans; Robbett, Andrea
  7. Monitoring and Pay: An Experiment on Contract Design with Endogenous Monitoring By Dittrich, Dennis A. V.; Kocher, Martin G.
  8. The Economic Returns to Graduating with Honors - Evidence from Law Graduates By Schumann, Mathias; Freier, Ronny; Siedler, Thomas
  9. Honesty and Relational Contracts By Schmutzler, Armin; Holger, Herz; André, Volk
  10. The External Effect of Urban Schooling Attainment on Workers’ Incomes in Ecuador By Theodore R. Breton; Juan Pablo Jaramillo
  11. Do Wages Affect Politicians' Performance? A regression discontinuity approach for Dutch municipalities By Daan van der Linde; Swantje Falcke; Ian Koetsier; Brigitte Unger
  12. Do wage expectations influence the decision to enroll in nursing college? By Schweri, Juerg; Hartog, Joop
  13. LPP - linked personnel panel : quality of work and economic success: longitudinal study in German establishments (data documentation on the first wave) By Broszeit, Sandra; Wolter, Stefanie

  1. By: Werner, Peter; Ockenfels, Axel; Sliwka, Dirk
    Abstract: We conduct a field experiment in a naturally occurring labor environment and track whether the performance of workers responds to unexpected wage increases. Specifically, we investigate how the timing of wage increases affects efforts. We find that workers performance is about 11% higher for the same total wage when their wage is increased in two steps as opposed to a single increase at the outset. Moreover, workers are more honest and are more willing to do voluntary extra work after surprising wage increases compared to a baseline condition without increases.
    JEL: C93 D64 M52
    Date: 2014
  2. By: Koeniger, Winfried
    Abstract: We show that more human capital improves incentives in a standard optimal taxation problem: common assumptions about preferences and technology imply that the disutility of labor decreases less strongly in unobserved ability if agents have more human capital. Human capital thus reduces the informational rents of high ability types and relaxes the incentive constraints. Since parents do not take the effect of human capital on incentives into account when choosing how much to invest into their children, there is a rationale for education subsidies.
    JEL: E24 H21 J24
    Date: 2014
  3. By: Katolnik, Svetlana; Hakenes, Hendrik
    Abstract: The longer an agent is employed in a job, the more the principal will have learned about his ability through the history of performance. With implicit incentives, influence perceptions and effort incentives decrease over time. Rotating agents to a different job deletes learning effects about ability, creating fresh impetus for effort. However, job rotation also reduces the time horizon, and thus reduces rents from working and also incentives. In this trade-off, we derive conditions for the desirability of job rotation and show how in the presence of career concerns job rotation may emerge endogenously. Finally, our model allows for more general comments on the optimal rotation frequency as well as the preferred organizational design of a firm.
    JEL: D83 J24 L23
    Date: 2014
  4. By: Sauermann, Jan
    Abstract: This study uses rich information on performance outcomes to estimate the effect of bonus pay on worker productivity. We use a policy discontinuity in the call centre of a multi-national telephone company in which management introduced monetary bonuses upon achieving pre-defined performance thresholds. The results show that the bonus is associated with an increase of a third of a standard deviation in the underlying performance outcome. This effect is mostly driven by low-ability agents whose performance improvement is about three times as large as for the average worker. Conversely, the treatment effect for high-ability agents is even negative. Furthermore, we find that other, non-incentivised performance outcomes are positively affected.
    JEL: J33 M52 L96
    Date: 2014
  5. By: Gary Charness (Department of Economics, University of California, Santa Barbara, 2127 North Hall, Santa Barbara, CA 93106-9210); David Masclet (CREM, CNRS, University of Rennes, 7 place Hoche, 35000 Rennes, France, and CIRANO, Montreal, Canada); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: Unethical behavior within organizations is not rare. We investigate experimentally the role of status-seeking behavior in sabotage and cheating activities aiming at improving one’s performance ranking in a flat-wage environment. We find that average effort is higher when individuals are informed about their relative performance. However, ranking feedback also favors disreputable behavior. Some individuals do not hesitate to incur a cost to improve their rank by sabotaging others’ work or by increasing artificially their own performance. Introducing sabotage opportunities has a strong detrimental effect on performance. Therefore, ranking incentives should be used with care. Inducing group identity discourages sabotage among peers but increases in-group rivalry.
    Keywords: Status, ranking, feedback, sabotage, doping, competitive preferences, experiment
    JEL: C91 C92 M54 D63 J28 J31
    Date: 2014
  6. By: Carpenter, Jeffrey P. (Middlebury College); Matthews, Peter Hans (Middlebury College); Robbett, Andrea (Middlebury College)
    Abstract: The theory of compensating differentials has proven difficult to test with observational data: the consequences of selection, unobserved firm and worker characteristics, and the broader macroeconomic environment complicate most analyses. Instead, we construct experimental, real-effort labor markets and offer an evaluation of the theory in a controlled setting. We study both the wage differentials that evolve between firms with varying degrees of disamenity and how these differentials are affected by worker mobility and therefore selection. Consistent with the theory, we find that riskier firms must pay significantly higher wages to attract workers. Further, when workers are mobile, they sort into firms according to their attitudes towards risk and, as a result, the compensating differential shrinks. Last, we are also able to mimic the biases associated with observational studies.
    Keywords: compensating differential, sorting, experiment, real effort, risk aversion, ambiguity aversion, loss aversion
    JEL: J31 D01 C92
    Date: 2015–01
  7. By: Dittrich, Dennis A. V.; Kocher, Martin G.
    Abstract: We implement a laboratory experiment in which a principal has to decide on monitoring intensity and pay to investigate whether they are complements or substitutes. Wage level, monitoring intensity, and consequently the desired enforceable effort level are jointly determined by the maximization problem of the firm. As a result, theoretically monitoring and pay should be complements. The between-treatment variation in our experiment is qualitatively in line with the normative prediction of the model under standard assumptions. Also the subject-specific variation indicates that monitoring and pay are considered as complements. Yet, we also find evidence for reciprocal behavior. Our data analysis shows, however, that it does not pay for the principal to only rely on the reciprocity of his agents.
    JEL: C91 J31 J41
    Date: 2014
  8. By: Schumann, Mathias; Freier, Ronny; Siedler, Thomas
    Abstract: This paper studies the causal effects of graduating from university with an honors degree on subsequent labor market outcomes. While a rich body of literature has focused on estimating returns to human capital, few studies have analyzed returns at the very top of the education distribution. We highlight the importance of honors degrees for future labor market success in the context of German law graduates. Using a difference-in-differences research design combined with entropy balancing, we find that students of law who passed the state bar exam with an honors degree receive a significant earnings premium (about 14 percent), are more likely to work in public service (about 16 percentage points), are less likely to be self-employed (seven percentage points) and are more often engaged in Ph.D. studies (about 20 percentage points).
    JEL: J01 J31 J44
    Date: 2014
  9. By: Schmutzler, Armin; Holger, Herz; André, Volk
    Abstract: We study the economic consequences of opportunities for dishonesty in an environment where efficiency relevant behaviour is not contractible, but rather incentivized by informal agreements in an ongoing relationship. We document the repeated interaction between a principal and an agent who, within our main treatment, was privately informed about the costs of effort provision being either high or low. At the beginning of the interaction, an agent could either truthfully report the cost type to the principal or choose to lie about it. We find that a substantial fraction of low cost agents decided to signal high costs. Dishonest low cost and honest high cost agents pool on the complete information outcome with high costs, as measured in our control treatment. The outcome of such pooling is less efficient than for honest low cost agents. Moreover, principals who face dishonest agents earn substantially less profits than those facing honest agents. Our evidence therefore suggests that informal agreements in a repeated interaction generate less efficient outcomes if dishonesty is possible but, at the same time, are robust to substantial degrees of deception. We furthermore show that our experimental findings can be organized using the logic of repeated games.
    JEL: C73 D23 D82
    Date: 2014
  10. By: Theodore R. Breton; Juan Pablo Jaramillo
    Abstract: We estimate the direct and external effects of levels of schooling on personal income in Ecuador in 2011, using data for 69,653 individuals in 567 municipalities. Using a Mincerian model that includes municipal levels of schooling and the size of the municipality and controls for endogeneity, we find that each year of individual schooling raises individual income by 8.5 percent and each year of municipal schooling raises individual income by 2.2 percent. The external effect of an additional year of schooling is larger for workers with more schooling, for those with higher incomes, and for those in more educated municipalities.
    Keywords: Ecuador; Schooling; External Effects; Regional Economics; Human Capital
    JEL: I25 R1 O
    Date: 2014–12–02
  11. By: Daan van der Linde; Swantje Falcke; Ian Koetsier; Brigitte Unger
    Abstract: This paper examines the effects of local politician pay on performance for Dutch municipalities. Although literature has argued wages partly determine the value of holding political office and thereby higher wages may improve the quality of a candidate pool, no straightforward theoretical prediction exists relating politicians’ remuneration to performance. Data on municipal finances is used in a regression discontinuity design that exploits population thresholds which exogenously determine the wages of local politicians. We find higher wages significantly increase municipal net debt and local budgets, at the same time finding some evidence for increased satisfaction with public space. We contrast our findings to previous research on Italy which found similar effects concerning significance, albeit differences regarding the direction. We argue that even though the direction of the effect may differ, both findings could entail better performance given institutional differences between the two countries.
    Keywords: politicians' wages, local finance, regression discontinuity design
    Date: 2014–10
  12. By: Schweri, Juerg; Hartog, Joop
    Abstract: Given a severe nurse shortage in Switzerland, this paper investigates Swiss students choice for nursing college education and the impact of their ex ante wage expectations on college enrolment. The analysis contributes to a small developing literature that uses subjective wage expectation data to predict education choice. We surveyed a full cohort of healthcare trainees on upper-secondary level in their third year of training. The main result is that trainees who expected a lower starting wage when working as healthcare employee were more likely to enroll in a nursing college later on. This result suggests a role for policies that increase returns from studying nursing to attract students to nursing. In addition, the result confirms that subjective wage expectation data is useful in modeling individual choice.
    JEL: I21 I11 J24
    Date: 2014
  13. By: Broszeit, Sandra (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Wolter, Stefanie (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "This Datenreport describes the Linked Personnel Panel 2012/2013 (LPP 1213). The LPP is a linked-employer-employee data set on HR work, corporate culture and management instruments in German establishments that evolved within the framework of the project 'Quality of work and economic success'. The data set contains information on 1,219 establishments and 7,508 employees. On establishment level, the LPP is representative for German establishments with 50 and more employees in the processing industry and in the service sector. The linkage with the IAB Establishment Panel reveals a data product that enables longitudinal analyses regarding HR strategy and quality of work in Germany." (Author's abstract, IAB-Doku) ((en))<br><br><b>Additional Information</b><ul><li><a href=''>frequencies and labels</a></li></ul>
    Date: 2015–02–01

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