nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒04‒19
fifteen papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. Backscratching in Hierarchical Organizations By Maggian, Valeria; Montinari, Natalia; Nicolò, Antonio
  2. A Simple Model of Learning Styles By Gervas Huxley; Mike Peacey
  3. "The Impact of Working while Enrolled in College on Wages" By Wade Nelson, Owen Wade Nelson Jr
  4. The Future of the German Industrial Relations Model By David Marsden
  5. Foreign exposure and heterogeneous performance of Italian firms: A survey of the empirical literature (1992-2014) By Valeria Gattai
  6. Transparency of human resource policy By Mellander, Erik
  7. Firm-Level Early Intervention Incentives: Which Recent Employers of Disability Program Entrants Would Pay More? By David C. Stapleton; David R. Mann; Jae Song
  8. A Theory of Education and Health By Titus J. Galama; Hans van Kippersluis
  9. Managerial bonuses, subordinates’ disobedience, and coercion By Nikiforakis, Nikos; Oechssler, Jörg; Shah, Anwar
  10. Influence of Board Diversity and Characteristics on CEO Compensation: Contingent Effects of Concentrated Ownership By Balasubramanian, Bala N.; Barua, Samir K.; Karthik, D.
  11. International Human Resource Management: A Review from Pakistani Perspective By Shah, Syed Tanveer Hussain; Jamil, Raja Ahmed; Shah, Tazeem Ali; Kazmi, Zain
  12. Convex Incentives in Financial Markets: an Agent-Based Analysis By Annalisa Fabretti; Tommy Gärling; Stefano Herzel; Martin Holmen
  13. Nurses’ Motivation and Satisfaction at Work: an exploratory study at the Centro Hospitalar S. João By Fátima Gomes; Teresa Proença
  14. Managing Emotions: Emotional Labor or Emotional Enrichment By Chandwani, Rajesh; Sharma, Dheeraj
  15. Who should monitor job sick leave? By Carlo Alberto Biscardo; Alessandro Bucciol; Paolo Pertile

  1. By: Maggian, Valeria (University of Milano Bicocca); Montinari, Natalia (Department of Economics, Lund University); Nicolò, Antonio (University of Manchester)
    Abstract: In this paper we investigate the role of reciprocity in sustaining the emergence of implicit collusive agreements in hierarchical organizations. We conduct a laboratory experiment in which an agent hires, on behalf of the principal, one worker out of two candidates. The two candidates differ in their ability and, once employed, the worker chooses a level of non-contractible effort to exert in two tasks: one benefits the organization (that is both the principal and the agent) while the other one is less profitable, only benefits the agent and provides him with higher earnings. We provide evidence that: i) low ability workers are more likely to exert effort in the task that is exclusively beneficial to the agent; ii) as a consequence, agents distort the hiring process in favor of the low ability workers and iii) sharing a small part of the organization’s profits with the workers alleviates their effort distortion.
    Keywords: Conflict of Interest; Effort Distortion; Profit Sharing; and Reciprocity
    JEL: C91 J50 L14 M52
    Date: 2015–04–08
  2. By: Gervas Huxley; Mike Peacey
    Abstract: Much of the economic literature on education treats the process of learning as a `black box'. While such models have many interesting uses, they are of little use when a college seeks advice about reallocating resources from one input to another (e.g. from lecture hours to seminars). Commenting on such questions requires us to `open up' the black box. This paper shows what one such model would look like by explicitly modelling how students vary in their `learning styles'. We apply this framework to investigate how reforms to higher education (e.g. MOOCs) would affect students with different learning styles.
    Keywords: Human Capital, Education Production Function, Learning Style, Independent Learner, MOOC
    JEL: I20 I23 J24
    Date: 2014–05
  3. By: Wade Nelson, Owen Wade Nelson Jr
    Abstract: Those students who work while enrolled in college are investing in their human capital, and therefore, corporations looking to employ new workers entering the labor market may favor these types of students, and create incentives for non-working students to seek employment. Using NLSY97 data, this paper finds that working while enrolled in college decreases the wages one receives. Therefore, students who are not working while enrolled in school may have higher grades and graduate more frequently on time, causing firms to hire the non-working students more favorably.
    Keywords: Students, Wages, Enrolled, College, Working, Future Wages, Working while Enrolled
    JEL: J3 J30 J31 J6 J7
    Date: 2013–05–05
  4. By: David Marsden
    Abstract: The paper examines recent evidence on the erosion of the German industrial relations model. Although its coverage has declined, much of this has occurred in smaller and newer establishments, and compared with Britain, it has remained solid in the areas of Germany's traditional industrial strength. This is explained by the nature of high performance work systems that involve flexible working and on-the-job problem-solving. Both countries have modernised their work systems in recent decades, with German industrial firms maintaining higher degrees of worker autonomy and learning and British ones relying more on managerial control. The survival of the German model in this sector, as compared with services, is attributed to the role of such work systems in the high end of international competition. A model is developed to explain why stable cooperation within these work relationships is enhanced by means of a strong institutional framework. It is then used to explain why employers in the sectors using these systems have continued to work within these institutions. It is argued that employers' increased focus on the match between commercial needs and workplace institutions has contributed to the growing segmentation within German industrial relations which has been widely documented, and represents a departure from the classical post-war German model. The article finishes by asking how far this can go before damaging social and political cohesion.
    Keywords: Labor-management relations, trade unions, collective bargaining, human capital skills, labor contracting devices, Germany
    JEL: J5 J24 M55
    Date: 2015–04
  5. By: Valeria Gattai
    Abstract: This paper surveys 67 contributions on internationalisation and performance of Italian enterprises. It covers empirical studies (including working papers), published between 1992 and 2014, taking a microeconomic perspective and analysing the potential links between firms’ global involvement and heterogeneity in economic, human capital and innovation and financial measures. The discussion is organised in an intuitive and non-technical way. At the same time, we devote particular attention to studying the different papers from many points of view, including their internationalisation measures, performance indicators, empirical approach, causality and results.
    Keywords: Internationalisation, Performance, Italy, Firm-level data, Survey
    JEL: F1 F2 L2
    Date: 2015–04
  6. By: Mellander, Erik (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: The scope of public human resource policy is outlined. Motivation for the need of transparency in this policy is provided in terms of informational asymmetries, human capital externalities, and long planning horizons. Transparency is defined both along a time dimension – ex ante and ex post – and by a taxonomy due to Geraats (2014), referring to different facets of decision-making, implementation, and outcomes: political, economic, procedural, policy, and operational transparency. Five aspects on human resource policy relevant for transparency are considered: efficiency and equity, input utilization, learning outcomes, the dimensioning of education, and benefits and costs. Finally, suggestions for improved transparency are considered. These involve devoting resources to research on the measurement of human capital externalities, facilitation of ex ante benefit-cost analyses preceding human resource policy decisions, and strengthening of political accountability through intermediate follow-ups during policy implementation, combined with commitment of funds to finance independent evaluations of the policy’s effects.
    Keywords: Market failures; human capital externalities; long planning horizons; ex ante benefit-cost analyses; effect evaluations
    JEL: D61 D62 H11 H44 H83 I28
    Date: 2014–10–15
  7. By: David C. Stapleton; David R. Mann; Jae Song
    Keywords: Early Intervention Incentives, Employers, Disability Program Entrants
    JEL: I J
    Date: 2015–03–18
  8. By: Titus J. Galama (University of Southern California, and RAND Corporation, United States); Hans van Kippersluis (Erasmus School of Economics, Erasmus University Rotterdam, the Netherlands)
    Abstract: This paper presents a unified theory of human capital with both health capital and, what we term, skill capital endogenously determined within the model. By considering joint investment in health capital and in skill capital, the model highlights similarities and differences in these two important components of human capital. Health is distinct from skill: health is important to longevity, provides direct utility, provides time that can be devoted to work or other uses, is valued later in life, and eventually declines, no matter how much one invests in it (a dismal fact of life). Lifetime earnings are strongly multiplicative in skill and health, so that investment in skill capital raises the return to investment in health capital, and vice versa. The theory provides a conceptual framework for empirical and theoretical studies aimed at understanding the complex relati onship between education and health, and generates several new testable predictions.
    Keywords: health investment; lifecycle model; human capital; health capital
    JEL: D91 I10 I12 J00 J24
    Date: 2015–03–05
  9. By: Nikiforakis, Nikos; Oechssler, Jörg; Shah, Anwar
    Abstract: This study provides evidence from a laboratory experiment showing that managerial bonuses can affect adversely a manager’s subordinates. In our set up, managers compete to obtain a large bonus which depends partly on the effort exerted by their subordinates. Managers can suggest an effort level and coerce subordinates who disobey by punishing them. When managers compete for individual bonuses, we find that subordinates do not obey their demands. This doubles coercion rates relative to a control treatment without bonuses. In contrast, when managers compete for pooled bonuses which give managers discretionary power over the allocation of the bonus, most subordinates exert maximal effort. Although managers share a substantial fraction of the bonus, they are not worse off than they are with an individual bonus. A model in which agents care about inequality in earnings can account for the main findings in our experiment.
    Keywords: coercion; managerial incentives; disobedience; hierarchy; tournament.
    Date: 2015–04–14
  10. By: Balasubramanian, Bala N.; Barua, Samir K.; Karthik, D.
    Abstract: The crisis in the financial and the banking sectors in 2008-2009 brought back into focus the issue of CEO and top management compensation. The unconscionably high compensations, unjustified even remotely by performance, raised concerns about governance of companies. The study, the first of its kind, investigates the efficacy of board diversity and various measures of board independence for different ownership structures and different types of concentrated owners – private domestic, private foreign and government, in controlling CEO compensation in the same economic setting. The sample for the study consists of companies that were a part of the diversified 100 stock index of the National Stock Exchange in India for the period 2007-2012. The main theoretical contribution is that the impact of board diversity and board mechanisms is moderated by the type of concentrated ownership. Separation of board chair and CEO positions is the single most important governance measure for controlling excessive compensation to CEOs. Other board mechanisms to check executive compensation work along predicted lines for firms with dominant foreign owners but do not work for other types of concentrated ownership. Gender diversity and large number of non-executive independent directors deflate CEO compensation only in case of companies with foreign dominant owners. Besides theoretical contribution on moderating influence of type of concentrated ownership, the results provide actionable inputs for changes in legislation and practice of corporate governance.
  11. By: Shah, Syed Tanveer Hussain; Jamil, Raja Ahmed; Shah, Tazeem Ali; Kazmi, Zain
    Abstract: This article provides information about the International Human Resource Management and discusses HRM according to the international prospective in Pakistan. In this article it is discussed that how environmental and cultural factors affect the recruitment, selection and industry/employee relation in Pakistan. In the end some conclusions are made in reference to the context.
    Keywords: Human Resource Management, IHRM, Recruitment, Selection, Culture, Pakistan.
    JEL: F0 J0 M5
    Date: 2014–10–14
  12. By: Annalisa Fabretti (DEF, University of Rome Tor Vergata); Tommy Gärling (University of Gothenburg); Stefano Herzel (DEF and CEIS, University of Rome Tor Vergata); Martin Holmen (University of Gothenburg)
    Abstract: This paper uses agent-based simulation to analyze how financial markets are affected by market participants with convex incentives, e.g. option-like compensation. We document that convex incentives are associated with (i) higher prices, (ii) larger variations of prices, and (iii) larger bid-ask spreads. We conclude that convex incentives may lead to decreased stability of financial markets. Our analysis suggests that the decreased stability is driven by the fact that convex incentives pushes agents towards more extreme decisions. Furthermore, while risk preferences affect agent behavior if they have linear incentives, the effect of risk preferences vanishes with convex incentives.
    Keywords: incentives, market instability, agent-based simulations.
    JEL: G10 D40 D53
    Date: 2015–04–08
  13. By: Fátima Gomes (Hospital de S. João); Teresa Proença (CEF.UP, Faculdade de Economia, Universidade do Porto)
    Abstract: This study aims to assess nurses’ motivation and satisfaction and measure the impact of socio-demographical and socio-professional variables, namely professional contract. A questionnaire was delivered to a sample consisting of 560 nursing professionals of the second major Hospital in Portugal, Hospital São João (HSJ): 277 nurses on public contract, 173 on open ended contract and 110 on fixed term contract. Results show that the relationship with the patients is the most important factor for nurses’ satisfaction, followed by satisfaction with the job content. Remuneration is the factor in which nurses show the least satisfaction. Nurses with a fixed contract, the most insecure of all, are the ones with greater motivation and satisfaction, contrary to what is expected according to content motivational theories. However, they also have greater expectation that their performance can improve their contract, what may explain the previous results. This paper also suggests that work and the type of contract has an impact on personal life and vice-versa, namely on the intent of leaving the job, on the marital status and the number of children.
    Keywords: motivation, satisfaction, nursing, professional contract
    JEL: J28
    Date: 2015–04
  14. By: Chandwani, Rajesh; Sharma, Dheeraj
    Abstract: Concept of ‘emotional labor’ has undergone many transformations since Hochschild (1983) described it. Researchers have broadened its scope by including emotion management by professionals in different roles, exploring its positive or beneficial aspects, and studying the contingency factors influencing the process of emotion management. In this paper we attempt to relate both positive and negative aspects of emotion management by exploring factors that may affect the outcomes. Self selection into the role which involves emotion work is identified as the key factor which determines whether it will be perceived as positive or negative, thus influencing the outcome of emotion work. Concept of “emotional enrichment” is introduced to describe a process diametrically opposite to “emotional labor”, resulting from job satisfaction and personal accomplishment, leading to physical, emotional and psychological well being. The two aspects of the consequences of emotion work and the antecedents and moderating factors are represented in a comprehensive model.
  15. By: Carlo Alberto Biscardo (INPS, Verona); Alessandro Bucciol (Department of Economics (University of Verona)); Paolo Pertile (Department of Economics (University of Verona))
    Abstract: We use a large and unique administrative dataset from Italy, covering the period 2009-2014, to investigate opportunistic behavior (moral hazard) and the effectiveness of monitoring policies related to insurance against illness-related income losses. The analysis is based on the outcome of mandatory medical visits aimed at verifying the health status of employees during sickness spells. We find that employers are more effective than the public insurer in selecting sickness episodes to monitor. However, a reduction in the number and a better targeting of visits with the support of appropriate statistical tools may close the gap. We discuss the impact of using direct measures of health, such as the outcome of a medical visit, on the study of the determinants of opportunistic behavior and argue that simply looking at days of work lost, without appropriately controlling for health status, may lead to misleading conclusions if the goal is studying moral hazard.
    Keywords: sick leave insurance, moral hazard, absenteeism, work ability
    JEL: D03 I18
    Date: 2015–04

This nep-hrm issue is ©2015 by Tommaso Reggiani. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.