nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒02‒28
twelve papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Teachers and Performance Pay in 2014: First Results of a Survey By David Marsden
  2. Share Capitalism and Worker Wellbeing By Alex Bryson ; Andrew E. Clark ; Richard B. Freeman ; Colin P. Green
  3. The Race Between Technology and Human Capital By Nancy L Stokey
  4. Bubbles in hybrid markets - How expectations about algorithmic trading affect human trading By Mike Farjam ; Oliver Kirchkamp
  5. Dynamic Managerial Compensation: On the Optimality of Seniority-based Schemes By Daniel Garrett ; Alessandro Pavan
  6. LPP - Linked Personnel Panel : quality of work and economic success: longitudinal study in German establishments (data collection on the first wave) By Bellmann, Lutz ; Bender, Stefan ; Bossler, Mario ; Broszeit, Sandra ; Dickmann, Christian ; Gensicke, Miriam ; Gilberg, Reiner ; Grunau, Philipp ; Kampkötter, Patrick ; Laske, Katharina ; Mohrenweiser, Jens ; Schröder, Helmut ; Schütz, Holger ; Sliwka, Dirk ; Steffes, Susanne ; Stephani, Jens ; Tschersich, Nikolai ; Wolter, Stefanie
  7. Competition, outside directors and executive turnover: Implications for corporate governance in the EU By Buchwald, Achim
  8. Multifaceted Transactions, Incentives, and Organizational Form By Habib, Michel Antoine
  9. Why organizations fail: models and cases By Garicano, Luis ; Rayo, Luis
  10. Human capital in economic development: from labour productiviey to macroeconomic impact By Kristinn Hermannsson ; Patrizio Lecca
  11. The Pros and Cons of Sick Pay Schemes: A Method to Test for Contagious Presenteeism and Shirking Behavior By Pichler, Stefan ; Ziebarth, Nicolas R.
  12. Academic Spinoffs New Venture Teams and Performance: Insights from Faultline Theory By Cyrine Ben-­-Hafaïedh ; Alessandra Micozzi ; Pierpaolo Pattitoni

  1. By: David Marsden
    Abstract: From the autumn of 2014, a new performance pay scheme was introduced for school teachers in England and Wales. It makes pay progression for all teachers dependent upon their performance as evaluated by their line managers by means of performance appraisals. This paper reports the results of a the first wave of a survey of teachers' views about performance pay and their beliefs about its effects on their performance and that of their schools before the first decisions about pay awards under the new scheme. Further surveys are planned to follow the scheme over time. School leaders were also surveyed. The results so far confirm a broadly negative view among teachers as to the desirability and likely motivational effects of linking pay progression to performance, but they also show a more positive view of the process of performance appraisal. The results are compared with those of a similar CEP survey carried out in 2000 just before the previous scheme was introduced.
    Keywords: Compensation packages, payment methods, public sector labor markets, compensation
    JEL: J33 J45 M52
    Date: 2015–02
  2. By: Alex Bryson ; Andrew E. Clark ; Richard B. Freeman ; Colin P. Green
    Abstract: We show that worker wellbeing is not only related to the amount of compensation workers receive but also how they receive it. While previous theoretical and empirical work has often been pre-occupied with individual performance-related pay, we here demonstrate a robust positive link between the receipt of a range of group performance schemes (profit shares, group bonuses and share ownership) and job satisfaction. Critically, this relationship remains after conditioning on wage levels, which suggests these pay methods provide utility to workers in addition to that through higher wages. These findings survive a variety of methods aimed at accounting for unobserved individual and job-specific characteristics. We investigate two potential channels for this effect. We first demonstrate that half of the positive effect can be accounted for by employees' tendency to reciprocate in return for the "gift" of share capitalism. Second, we show that these 'share capitalist' modes of pay dampen the negative wellbeing effects of what we typically think of as "bad" aspects of job quality. Finally, share-capitalist pay methods also have positive wellbeing spill-over effects on co-workers.
    Keywords: Job satisfaction, wages, compensation methods, working conditions
    JEL: J28 J33 J54 J63 J81 M52
    Date: 2015–02
  3. By: Nancy L Stokey (Department of Economics )
    Abstract: This paper develops a model in which heterogenous firms invest in R&D to improve technology, and heterogeneous workers invest in human capital to increase their earnings. Both investment technologies have stochastic components, and the balanced growth path has stationary, nondegenerate distributions of technology and human capital. Technology and human capital are complements in production, so the labor market produces assortative matching between firms and workers: firms with higher productivity employ higher quality workers and pay higher wages. Thus, wage differentials across firms have two sources: differences in firm productivity and differences in labor quality.
    Date: 2014
  4. By: Mike Farjam ; Oliver Kirchkamp (School of Economics and Business Administration, Friedrich-Schiller-University Jena )
    Abstract: Bubbles are omnipresent in lab experiments with asset markets. But these experiments were (mostly) conducted in environments with only human traders. Today markets are substantially determined by algorithmic traders. Here we use a laboratory experiment to measure human trading behaviour changes if these humans expect algorithmic traders. To disentangle the direct effect algorithmic traders have we use a clean design where we can manipulate only the expectations of human traders. We find clearly smaller bubbles if human traders expect algorithmic traders to be present.
    Keywords: Bubbles, Expectations, Experiment, Algorithmic Traders
    JEL: C92 G02
    Date: 2015–02–11
  5. By: Daniel Garrett ; Alessandro Pavan
    Abstract: We study the optimal dynamics of incentives for a manager whose ability to generate cash ows changes stochastically with time and is his private information. We show that, in general, the power of incentives (or "pay for performance") may either increase or decrease with tenure. However, risk aversion and high persistence of ability call for a reduction in the power of incentives later in the relationship. Our results follow from a new variational approach that permits us to tackle directly the "full program," thus bypassing some of the di¢ culties of working with the "relaxed program" encountered in the dynamic mechanism design literature.
    Keywords: managerial compensation, power of incentives, pay for performance, dynamic mechanism design, adverse selection, moral hazard, persistent productivity shocks, risk aversion. JEL Classification: D82
    Date: 2014–11–01
  6. By: Bellmann, Lutz (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] ); Bender, Stefan (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] ); Bossler, Mario (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] ); Broszeit, Sandra (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] ); Dickmann, Christian ; Gensicke, Miriam ; Gilberg, Reiner ; Grunau, Philipp (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] ); Kampkötter, Patrick ; Laske, Katharina ; Mohrenweiser, Jens ; Schröder, Helmut ; Schütz, Holger ; Sliwka, Dirk ; Steffes, Susanne ; Stephani, Jens ; Tschersich, Nikolai ; Wolter, Stefanie (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] )
    Abstract: "The project 'Quality of work and economic success' examines the correlation between the implementation of sustainable human resource (HR) management approaches, the quality of work and the success of a company. The goal is to identify development processes and approaches for promising measures to maintain people's ability to work and/or increase the employability in companies. In order to gain insight into the working world, at first establishments were interviewed with respect to their HR work. In a second step, employees of these establishments were interviewed on the effect of these HR measures and on their satisfaction. The project is initially designed to include two survey waves at a two-year interval. This Methodenreport describes the collection of establishment and employee data from its conception to the linkage of the two data sets for the first survey wave in 2012." (Author's abstract, IAB-Doku) ((en))
    Date: 2015–01–29
  7. By: Buchwald, Achim
    Abstract: This study contributes to the ongoing debate on the relevance of non-executive outside directors for corporate governance building on a large panel of European listed firms in the period 2003 to 2011. Focusing on executive turnover as an indicator for effective monitoring, the findings reveal that outside directors and product market competition are substitutes. Outsiders increase the performance-turnover sensitivity of executives exclusively if competition in the industry is relatively weak. In an environment with effective competition, outsiders do not significantly influence the decision to replace underperforming managers. In fiercely competitive markets, the higher threat of bankruptcy or hostile takeover seems to effectively limit managerial discretion for opportunistic behavior.
    Keywords: Competition,Corporate Governance,Executive Turnover,Outside Directors
    JEL: G34 J24 J63 L40 M00
    Date: 2015
  8. By: Habib, Michel Antoine
    Abstract: When not every facet of a transaction can be contracted upon and transacting parties' payoffs are asymmetric, low-powered incentives for those facets of the transaction that can be contracted upon may be necessary to avoid too large a distortion in those facets that cannot be contracted upon (Barzel, 1982, 1997; Hansmann, 1996; Holmstrom and Milgrom, 1991). Distinguishing between different types of capital (financial, physical, intangible), different forms of incentives (performance pay, organizational form, ownership), and different transacting pairs (manager/shareholder, supplier/buyer, customer/firm), and using a model of investment developed by Falkinger (2014), we extend the preceding insight to explain partnerships, mutuals, cooperatives, government ownership, and vertical integration. Distinguishing between resource allocation and resource creation, we show that resource creation calls for higher powered incentives than does resource allocation. Allowing for diversification-induced economies of scale in the use of capital, we establish the result that larger, more diversified firms offer higher-powered incentives. Finally, allowing for the partial contractibility of investment and the use of capital, we show that the former decreases the power of incentives whereas the latter increases that power, thereby providing a combined explanation for the Nineteenth- and Twentieth-Century rise of large military and civilian bureaucracies and the more recent outsourcing of products and services previously sourced internally. Our results suggest that the recognition of the multiple facets of most transactions can help explain numerous institutional arrangements, as well as the apparent lack of disadvantage of low-powered-incentives organizations competing with their high-powered-incentives counterparts (Bohren and Josefsen, 2013; Hansmann and Thomsen, 2012).
    Keywords: contractability; general and specialized investment; low-powered incentives; organizational form; resource allocation; resource creation
    JEL: L22 L24 L33
    Date: 2015–02
  9. By: Garicano, Luis ; Rayo, Luis
    Abstract: Organizations fail due to incentive problems (agents do not want to act in the organization's interests) and bounded rationality problems (agents do not have the necessary information to do so). This survey uses recent advances in organizational economics to illuminate organizational failures along these two dimensions. We combine reviews of the literature with simple models and case discussions. Specifically, we consider failures related to the allocation of authority and short-termism, both of which are instances of 'multitasking problems'; communication failures in the presence of both soft and hard information due to incentive misalignments; resistance to change due to vested interests and rigid cultures; and failures related to the allocation of talent and miscommunication due to bounded rationality. We find that the organizational economics literature provides parsimonious explanations for a large range of economically significant failures.
    Keywords: organizational economics
    JEL: D21 D86 J33 L23 M52
    Date: 2015–02
  10. By: Kristinn Hermannsson (Centre for Educational Change, University of Glasgow ); Patrizio Lecca (Department of Economics, University of Strathclyde )
    Abstract: Micro-econometric evidence reveals high private returns to education, most prominently in low-income countries. However, it is disputed to what extent this translates into a macro-economic impact. This paper projects the increase in human capital from higher education in Malawi and uses a dynamic applied general equilibrium model to estimate the resulting macroeconomics impact. This is contingent upon endogenous adjustments, in particular how labour productivity affects competitiveness and if this in turn stimulates exports. Choice among commonly applied labour market assumptions and trade elasticities results in widely different outcomes. Appraisal of such policies should consider not only the impact on human capital stocks, but also adjustments outside the labour market.
    Keywords: human capital, higher education, labour markets, trade, Malawi
    JEL: O15 O22 E17 I25 F16
    Date: 2015–02
  11. By: Pichler, Stefan (ETH Zurich ); Ziebarth, Nicolas R. (Cornell University )
    Abstract: This paper proposes a test for the existence and the degree of contagious presenteeism and negative externalities in sickness insurance schemes. First, we theoretically decompose moral hazard into shirking and contagious presenteeism behavior. Then we derive testable conditions for reduced shirking, increased presenteeism, and the level of overall moral hazard when benefits are cut. We implement the test empirically exploiting German sick pay reforms and administrative industry-level data on certified sick leave by diagnoses. The labor supply adjustment for contagious diseases is significantly smaller than for non-contagious diseases, providing evidence for contagious presenteeism and negative externalities which arise in form of infections.
    Keywords: sickness insurance, sick pay, presenteeism, contagious diseases, infections, negative externalities, shirking
    JEL: I12 I13 I18 J22 J28 J32
    Date: 2015–02
  12. By: Cyrine Ben-­-Hafaïedh (IÉSEG School of Management,France ); Alessandra Micozzi (Università Politecnica delle Marche, Italy ); Pierpaolo Pattitoni (University of Bologna, Italy )
    Abstract: Academic spin-offs (ASOs) are particular new technology-based firms (NTBFs) originating from public or university-based research institutions. One of their major challenges is to integrate scientific knowledge with the commercial knowledge in the entrepreneurial team (ET). The effect of ET composition on ASO performance has generally been examined through human capital theory or upper echelons theory. These traditional approaches have their merits and generally conclude to the necessity to add surrogate (external) entrepreneurs to the core team of academics. However, this would create a faultline, i.e. a divide between these two subgroups that negatively impacts team processes, and might explain why these artificially created ETs are not as successful as expected. We argue that a combination of these different lenses on ET composition and its relationship with performance may lead to a better understanding. Drawing on the human capital and upper echelons theories on the one hand and on the faultline theory on the other, we develop interaction hypotheses to test for their combined effect on a sample of 172 Italian ASOs. Our results permit to reveal the significant impact on performance of subtle compositional dimensions of the core academic ET that would have otherwise gone unnoticed. They also allow us to stress the importance of cognitive distance optimizers and show how they contribute not only to prevent the negative effects of diversity but also to create the preconditions for the positive effects. Theoretical and practical implications are drawn and future avenues of research suggested.
    Keywords: Entrepreneurial teams; faultline theory; human capital theory; academic spin-offs;performance
    Date: 2015–02

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