nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒03‒13
twelve papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. "Incentives and Social Preferences: Experimental Evidence from a Seemingly Inefficient Traditional Labor Contract" By Jun Goto; Yasuyuki Sawada; Takeki Aida; Keitaro Aoyagi
  2. Optimal incentive contracts to avert firm relocation By Martin Pollrich; Robert Schmidt
  3. University Prestige, Performance Evaluation, and Promotion: Estimating the employer learning model using personnel datasets By ARAKI Shota; KAWAGUCHI Daiji; ONOZUKA Yuki
  4. Mobility across Firms and Occupations among Graduates from Apprenticeship By Bernd Fitzenberger
  5. Dealing with Dynamic Agency By Benjamin Falkeborg
  6. The Efficiency of Slacking Off: Evidence from the Emergency Department By David C. Chan, Jr.
  7. Worker Search Effort as an Amplification Mechanism By Paul Gomme; Damba Lkhagvasuren
  8. A Field Study on University Enrolment: The Intentions of Prospective Students By Martina Menon; Federico Perali
  9. Why are Higher Skilled Workers More Mobile Geographically? The Role of the Job Surplus By Michael Amior
  10. Costs and benefits of flexibility and autonomy in working time: The same for women and men? By Lott, Yvonne
  11. Teaching Styles and achievement: Student and Teacher Perspectives By Hidalgo-Cabrillana, Ana; Lopez-Mayan, Cristina
  12. Does success breed success? A quasi-experiment on strategic momentum in dynamic contests By Romain Gauriot; Lionel Page

  1. By: Jun Goto (Institute of Economic Research,Center for Economic Institutions); Yasuyuki Sawada (Faculty of Economics, The University of Tokyo); Takeki Aida (National Graduate Institute for Policy Studies (GRIPS)); Keitaro Aoyagi (Faculty of Economics, The University of Tokyo)
    Abstract: This paper investigates the interplay between economic incentives and social norms in formulating rice planting contracts in the Philippines. In our study area, despite the potential for pervasive opportunistic behaviors by workers, a fixed-wage (FW) contract has been dominant for rice planting. To account for the use of this seemingly inefficient contractual arrangement, we adopt a hybrid experimental method of framed field experiments by randomized controlled trials (RCT), in which we randomly assign three distinct labor contracts—FW, individual piece rate (IPR), and group piece rate (GPR)—and artefactual field experiments to elicit social preference parameters. Through analyses of individual workers’ performance data from framed field experiments and data on social preferences elicited by artefactual field experiments, three main empirical findings emerge. First, our basic results show the positive incentive effects in IPR and, equivalently, moral hazard problems in FW, which are consistent with standard theoretical implications. Second, non-monetary incentives seem to play a significant role under FW: while social preferences such as altruism and guilt aversion play an important role in stimulating incentives under FW, introducing monetary incentives crowds out such intrinsic motivations, and other nonmonetary factors such as positive peer effects significantly enhance incentives under a FW contract. Finally, as alternative hypotheses, our empirical results are not necessarily consistent with the hypothesis of the interlinked contract of labor and credit transactions in mitigating moral hazard problems, the optimality of FW contract under large effort measurement errors, and the intertemporal incentives arising from performance-based contract renewal probabilities. Hence, considering the interplay of intrinsic motivations and monetary incentives as well as the monetary costs of mitigating moral hazard and free-riding problems through IPR, we may conclude that seemingly perverse traditional contractual arrangements might be socially efficient. --
    Date: 2015–03
  2. By: Martin Pollrich (Humboldt-Universitaet zu Berlin, Department of Economics); Robert Schmidt (Humboldt-Universitaet zu Berlin, Department of Economics)
    Abstract: A unilateral policy intervention by a country (such as the introduction of an emission price) can induce firms to relocate to other countries. We analyze a dynamic game where a regulator offers contracts to avert relocation of a firm in each of two periods. The firm can undertake a location-specific investment (e.g., in abatement capital). Contracts can be written on some contractible productive activity (e.g., emissions), but the firm's investment is not contractible. A moral hazard problem arises under short-term contracting that makes it impossible to implement outcomes with positive transfers in the second period. The regulator resorts to high-powered incentives in the first period. The firm then overinvests and a lock-in effect prevents relocation in both periods. Paradoxically, the distortion in the first-period contract can be so severe that higher transfers are needed to avert relocationccompared to a (hypothetical) situation without the investment opportunity. Creation Date: 2014-9
    Keywords: moral hazard, contract theory, limited commitment, firrm mobility, abatement capital
    JEL: D82 D86 L51 Q58
  3. By: ARAKI Shota; KAWAGUCHI Daiji; ONOZUKA Yuki
    Abstract: The employer learning model postulates that employers form employees' prior ability distribution from educational credentials and update its distribution by observing workers' performance on the job. This paper estimates the employer learning model for university-graduate white-collar workers using personnel datasets from two large manufacturers that contain rich information, including the name of the university from which the worker graduated, annual performance evaluations, and position in the promotion ladder. The estimates indicate that employers learn workers' ability relatively quickly through observing their performance on the job. The initial expectation errors on ability decline by a half in about three to four years in the two companies. Companies promote graduates of elite schools quickly mainly because they tend to perform better on the job.
    Date: 2015–03
  4. By: Bernd Fitzenberger (University of Freiburg, Department of Economics)
    Abstract: This paper estimates the wage effects of mobility across firms and occupations for male workers after apprenticehip in Germany. We employ an instrumental variables approach exploiting variation in regional labor market characteristics. Our estimates imply that pure firm changes and occupation and job changes after graduation from apprenticeship imply average wage losses, whereas an occupation change with the training firm results in persistent wage gains. Our results suggest that for the majority of cases a change of occupation involves a career progression. In contrast, for job switches the loss of firm-specific human capital seems to dominate. Creation Date: 2014-10
    Keywords: Apprenticeship Training, Job Mobility, Occupational Mobility, Wages
    JEL: J62 J24 J30 J31
  5. By: Benjamin Falkeborg (Department of Economics, University of Copenhagen)
    Abstract: I study the implications of agency frictions for the pricing policy of institutional market makers. In a setting where a market maker cannot observe the actions of an employed trader, I derive the optimal compensation structure and pricing policy. The theory demonstrates that incentive contracting and the price for immediacy are inherently linked. When the trader’s compensation is optimally deferred according to order flow, market making efficiency is improved and the quoted spreads are minimized. In other words, optimizing trader compensation leads to a liquidity gain.
    Keywords: Market Making, Hedging, Dynamic Moral Hazard, Recursive Contracts, Liquidity Provision.
    JEL: D81 D86 G12 J33
    Date: 2015–02–27
  6. By: David C. Chan, Jr.
    Abstract: Work schedules play an important role in time-sensitive production utilizing workers interchangeably. Studying emergency department physicians in shift work, I find two types of strategic behavior induced by schedules. First, on an extensive margin, physicians "slack off" by accepting fewer patients near end of shift (EOS). Second, on an intensive margin, physicians distort patient care, incurring higher costs as they spend less time on patients accepted near EOS. I demonstrate a tradeoff between these two strategic behaviors, by examining how they change with shift overlap. Accounting for both costs of physician time and patient care, I find that physicians slack off at approximately second-best optimal levels.
    JEL: D20 I10 L23 M50
    Date: 2015–03
  7. By: Paul Gomme (Concordia University and CIREQ); Damba Lkhagvasuren (Concordia University and CIREQ)
    Abstract: It is well known that the Diamond-Mortensen-Pissarides model exhibits a strong trade-off between cyclical unemployment fluctuations and the size of rents to employment. Introducing endogenous job search effort reduces the strength of the trade-off while bringing the model closer to the data. Ignoring worker search effort leads to a large upward bias in the elasticity of matches with respect to vacancies. Merging the American Time Use Survey and the Current Population Survey, new evidence in support of procyclical search effort is presented. Average search effort of the unemployed is subject to cyclical composition biases.
    Keywords: Variable Search Effort, Unemployment and Vacancies, Beveridge Curve, Search Intensity, Time Use
    JEL: E24 E32 J63 J64
    Date: 2015–02
  8. By: Martina Menon (Department of Economics (University of Verona)); Federico Perali (Department of Economics (University of Verona))
    Abstract: We study the university choice of prospective students using a unique dataset enriched with “lab-in-the-field” experiments aimed at eliciting risk and time preferences of students. Controlling for assortative mating, we find that father's rather than mother's education is significantly associated with the likelihood of children's enrolment in university indicating that the intergenerational transmission of human capital is mainly channelled through the father's education. Family possessions, as measured by homeownership, are positively associated with the likelihood of children's enrolment, while parental income has a small impact on this choice. This result suggests that in our sample there is equal access to university irrespective of short-time family liquidity constraints. We also find that economic preference parameters, such as risk and time preferences, account for a small part of the prospect of enrolling in university, while subjective expectations, effort and school ability of children are strong predictors of future schooling investment. In addition, through a counterfactual analysis, sports activities among children appear to increase the university enrolment rate. Our findings provide helpful directions for decision-makers to attract talented students to tertiary education.
    Keywords: University enrolment, intentions data, family background, subjective expectations, cognitive and non-cognitive abilities, counterfactual analysis
    JEL: I21 I28
    Date: 2015–02
  9. By: Michael Amior
    Abstract: The skill gap in geographical mobility is entirely driven by workers who report moving for a new job. A natural explanation lies in the large expected surplus accruing to skilled job matches. Just as large surpluses ease the frictions which impede job search in general, they also help overcome those frictions (specifically moving costs) which plague cross-city matching in particular. I reject the alternative hypothesis that mobility differences are driven by variation in the moving costs themselves, based on PSID evidence on self-reported willingness to move. Evidence on wage processes also supports my claims.
    Keywords: Internal migration, job search, education, skills
    JEL: J24 J61 J64
    Date: 2015–03
  10. By: Lott, Yvonne
    Abstract: Using data from the German Socio-Economic Panel Study (SOEP, 2003, 2005, 2007, 2009, and 2011), the author scrutinizes the relations between women´s and men´s flexibility and autonomy in working time and two central work outcomes: overtime and income. Previously, research on flexibility and autonomy in working time mostly applied crosssectional data ignoring individuals self-selection into jobs. Furthermore, the association between flexibility and autonomy in working time and income has generally been neglected. Extending this literature, fixedeffects models show that flexible working time and working time autonomy are associated with an increase of overtime and income - but only for men. Whereas women in fulltime positions also increase their time investment with working time autonomy and employeeoriented flexibility to a similar extent, they do not receive similar financial rewards. These results point to gendered costs and benefits of working time flexibility and autonomy. Working time autonomy in particular is a crucial factor that reinforces gender inequality at the workplace and adds to the relatively high gender pay gap in Germany.
    Date: 2015
  11. By: Hidalgo-Cabrillana, Ana (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Lopez-Mayan, Cristina (Departamento de Economía Aplicada. Universidad Autónoma de Barcelona)
    Abstract: Using data from a Spanish assessment program of fourth-grade pupils, we analyze to what extent using certain teaching practices and materials in class is related to achievement in maths and reading. We distinguish using traditional and modern teaching styles. As a novelty, we measure in-class work using two different sources of information -teacher and students. Our identification strategy relies on between-class within-school variation of teaching styles. We find that modern practices are related to better achievement, specially in reading, while traditional practices, if anything, are detrimental. There are differences depending on the source of information: the magnitude of coefficients is larger when practices are reported by students. These findings are robust to considering alternative definitions of teaching practices. We obtain heterogeneous effects of teaching styles by gender and type of school but only when using students' answers. Our findings highlight the importance of the source of information, teacher or students, to draw adequate conclusions about the effect of teaching style on achievement.
    Keywords: Students and teacher reports; Test scores; Teacher quality; Modern and traditional teaching.
    JEL: I20 I21 J24
    Date: 2015–02
  12. By: Romain Gauriot; Lionel Page
    Abstract: We investigate whether professional agents react to changes of incentives during dynamic contests as predicted by contest theory. Using a large data set of point by point ball tracking data from tennis matches over the period 2005-2009, we exploit the randomised variation in point results that occurs when balls bounce very close from the court’s line to estimate the causal effect of winning a point on the chance to win the next point. In line with predictions from contest theory, we find evidence of a substantial momentum effect for male players. We do not find any significant effect for female players, suggesting the possible existence of gender differences in how agents react to incentives in contests.
    Date: 2014–11–05

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