nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒06‒05
twelve papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. On the Merit of Equal Pay: When Influence Activities Interact with Incentive Setting By Brice Corgnet; Ludivine Martin; Peguy Ndodjang; Angela Sutan
  2. Performance-Based Financing, Motivation and Final Output in the Health Sector: Experimental Evidence from the Democratic Republic of Congo By Elise Huillery; Juliette Seban
  3. Coming to work while sick: An economic theory of presenteeism with an application to German data By Hirsch, Boris; Lechmann, Daniel S. J.; Schnabel, Claus
  4. Wall Street occupations By Ulf Axelson; Philip Bond
  5. Trade in Tasks and the Organization of Firms By Marin, Dalia; Schymik, Jan; Tarasov, Alexander
  6. Team Production benefits from a Permanent Fear of Exclusion By Anita Kopányi-Peuker; Theo Offerman; Randolph Sloof
  8. Peer Settings Induce Cheating on Task Performance By Agnes Baeker; Mario Mechtel
  9. Do Green Jobs Differ from Non-Green Jobs in Terms of Skills and Human Capital? By Davide Consoli; Giovanni Marin; Francesco Vona; Alberto Marzucchi
  11. Teams, Organization and Education Outcomes: Evidence from a field experiment in Bangladesh By Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves
  12. Economies to Scale and the Importance of Human Capital in the Moulds Industry in Portugal: A Micro Panel Data Approach By Fátima Diniz; Elias Soukiazis

  1. By: Brice Corgnet (Chapman University, Economic Science Institute); Ludivine Martin (Luxembourg Institute of Socio-Economic Research); Peguy Ndodjang (Luxembourg Institute of Socio-Economic Research); Angela Sutan (ESC Dijon, LESSAC)
    Abstract: Influence costs models predict that organizations should limit managerial discretion to deter organizational members from engaging in wasteful politicking activities. We test this conjecture in a controlled, yet realistic, work environment in which we allow employees to influence managers’ decisions about rewards. We find that influence activities are pervasive and significantly lower organizational performance. Organizational performance suffers because principals offer weaker incentives when influence activities are allowed than when they are not. Importantly, we show that equal pay incentive schemes perform better when influence activities are available than when they are not. Our results thus support the idea that prevalent politicking activities may account for the widespread use of bureaucratic, and apparently inefficient, compensation rules in organizations.
    Keywords: Influence activities, incentive theory, theory of the firm, organizational economics
    JEL: C91 D23 D86 M52
    Date: 2015
  2. By: Elise Huillery (ECON - Département d'économie - Sciences Po); Juliette Seban (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: Performance-based financing becomes a common strategy to improve health sector quality. The findings of this paper imply that performance-based financing should take motivational effects and levels of provider capacity into account. Using a field experiment in the Democratic Republic of Congo, we find that financial incentives led to more effort from health workers on rewarded activities, without deterring effort on non-rewarded activities. We also find a shift from intrinsic to extrinsic motivation. Finally, the increased effort by health workers proved unsuccessful and led to a reduction in revenue, suggesting that health workers lacked the capacity to develop appropriate strategies to perform.
    Date: 2014–10
  3. By: Hirsch, Boris; Lechmann, Daniel S. J.; Schnabel, Claus
    Abstract: Presenteeism, i.e. attending work while sick, is widespread and associated with significant costs. Still, economic analyses of this phenomenon are rare. In a theoretical model, we show that presenteeism arises due to differences between workers in (healthrelated) disutility from workplace attendance. As these differences are unobservable by employers, they set wages that incentivise sick workers to attend work. Using a large representative German data set, we test several hypotheses derived from our model. In line with our predictions, we find that bad health status and stressful working conditions are positively related to presenteeism. Better dismissal protection, captured by higher tenure, is associated with slightly fewer presenteeism days, whereas the role of productivity and skills is inconclusive.
    Keywords: presenteeism,absenteeism,sick leave,Germany
    JEL: I19 J22
    Date: 2015
  4. By: Ulf Axelson; Philip Bond
    Abstract: Many finance jobs entail the risk of large losses, and hard-to-monitor effort. We analyze the equilibrium consequences of these features in a model with optimal dynamic contracting. We show that finance jobs feature high compensation, up-or-out promotion and long work hours, and are more attractive than other jobs. Moral hazard problems are exacerbated in booms, even though pay increases. Employees whose talent would be more valuable elsewhere can be lured into finance jobs, while the most talented employees might be unable to land these jobs because they are “too hard to manage.”
    Keywords: investment banking; compensation contracts
    JEL: E24 G24 J31 J33 J41 M51 M52
    Date: 2015
  5. By: Marin, Dalia; Schymik, Jan; Tarasov, Alexander
    Abstract: We incorporate trade in tasks à la Grossman and Rossi-Hansberg (2008) into a small open economy version of the theory of firm organization of Marin and Verdier (2012) to examine how offshoring affects the way firms organize. We show that the offshoring of production tasks leads firms to reorganize with a more decentralized management, improving the competitiveness of the offshoring firms. We show further that the offshoring of managerial tasks relaxes the constraint on managers but toughens competition, and thus has an ambiguous impact on the level of decentralized management and CEO wages of the offshoring firms. In sufficiently open economies, however, managerial offshoring unambiguously leads to more decentralized management and to larger CEO wages. We test the predictions of the model based on original firm level data we designed and collected of 660 Austrian and German multinational firms with 2200 subsidiaries in Eastern Europe. We find that offshoring firms are 33.4% more decentralized than non-offshoring firms. We find further that the average fraction of managers offshored reduces the level of decentralized management by 3.1%, but increases the level of decentralized management by 4% in industries with a level of openness above the 25th percentile of the openness distribution. Lastly, we find that one additional offshored manager lowers CEO wages relative to workers by 4.9%.
    Keywords: CEO pay; international trade with endogenous organizations; multinational firms; the rise of human capital; theory of the firm
    JEL: D23 F12 F14 L22
    Date: 2015–05
  6. By: Anita Kopányi-Peuker (Faculty of Economics and Business, University of Amsterdam, the Netherlands); Theo Offerman (Faculty of Economics and Business, University of Amsterdam, the Netherlands); Randolph Sloof (Faculty of Economics and Business, University of Amsterdam, the Netherlands)
    Abstract: One acclaimed role of managers is to monitor workers in team production processes and discipline them through the threat of terminating them from the team (Alchian and Demsetz, 1972). We extend a standard weakest link experiment with a manager that can decide to replace some of her team members at a cost. The amount of contractual commitment (‘termination possibilities’) and the precision of the manager’s monitoring information serve as treatment variables. Our results show that the fear of exclusion has a profound effect on team performance even if workers are imperfectly monitored; the most flexible contract induces the highest output while the one with no firing possibilities leads to the lowest production. However, once the fear is eliminated for some workers, because permanent workers cannot be fired after a probation phase, effort levels steadily decrease.
    Keywords: team-production; weakest-link game; exclusion; probation; experiment
    JEL: C72 C92 M51 M55
    Date: 2015–05–29
  7. By: Adetayo Joshua Olusegun, Ajani John Oluwasayo, Olabisi Olawoyim (Department of Management and Accounting, ObafemiAwolowo University, Ile Ife. Nigeria, Department of Management and Accounting, ObafemiAwolowo University, Ile Ife. Nigeria)
    Abstract: This research work was carried out to appraise Job stress and performance of employee in an organization. One of the organizational outcomes that are affected by occupational stress is performance. Employees’ performance can be viewed as an activity in which an individual is able to accomplish the task assigned to his/her successfully, subject to the normal constraints of reasonable utilization of the available resources. The focus of this study is to appraise the cause of stress, the effect on employee performance, how workers identify those stress factors and react to the factors. The data of study was collected through the use of Primary and Secondary sources by administering questionnaires, personal interviews and information was extracted from relevant journals and statistical bulletins. The descriptive method was used to analyze the data with aid of frequency and percentage for the research objectives. >From the findings it was discovered that work overload, career development and work/family conflict are considered to likely cause a disruptive effect on performance of workers. The study reveals that workers performance were affected by the following factors; tiredness, worry, unhappiness, weakness, headache, and anger. Based on the findings of this study, the study concluded that job stress has significant effect on employees’ performance.
    Keywords: Performance of employees, job stress, Nigeria
    JEL: I15 J21 J29
    Date: 2015–01
  8. By: Agnes Baeker; Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: Recent research has shown that the presence of peers can increase individual output both in the lab and the eld. This paper tests for negative side effects of peer settings. We investigate whether peer settings are particularly prone to cheating even if they do not provide additional monetary benets of cheating. Participants in our real effort experiment had the opportunity to cheat when declaring their output levels. Although cheating did not have different monetary consequences when working alone than when working in the presence of a peer, we find that cheating is a more severe problem in peer settings.
    Keywords: cheating, peer effects, organizational design, personnel economics, experimental economics
    JEL: J20 J30 M50
    Date: 2015–06
  9. By: Davide Consoli (INGENIO CSIC-UPV, Valencia (Spain)); Giovanni Marin (Catholic University of Milan (Italy) & SPRU, University of Sussex, Brighton (UK).); Francesco Vona (OFCE-SciencesPo and SKEMA Business School, Sophia Antipolis (France).); Alberto Marzucchi (Catholic University of Milan (Italy) & SPRU, University of Sussex, Brighton (UK))
    Abstract: This paper elaborates an empirical analysis of labour force characteristics associated to environmental sustainability. Using data from the United States we compare green and non-green occupations to detect differences in terms of skill content and of human capital. The empirical profiling proposed here reveals that green jobs use non-routine (resp. routine) cognitive skills significantly more (resp. less) than non-green jobs. Green occupations also exhibit higher levels of formal education, work experience and on-the-job training. While preliminary, our exploratory exercise seeks to call attention to an underdeveloped theme, namely the labour market implications associated with the transition towards green growth.
    Keywords: Skills, Green Jobs, Task Model, Human Capital
    Date: 2015–05
  10. By: Natasa Stojkoviæ-Krstiæ (Banka Poštanska štedionica, a.d., Beograd)
    Abstract: The integrating business performance measurement system in the enterprise has the important role of development and guidance, giving the basis for formulating and guiding the corporate strategy. Relevance of the integrating business performance measurement system, that is, application of the performance measurement process at the different levels of activities and business dimensions includes the motivation role, since it stimulates higher objectives realization. The integrating business performance measurement system seems to be the basis for creating compensation system for managers and other employees. Relevance of the cited functions of integrating business performance measurement system requires the need for higher management initiation, considering its designing, implementation, and continual development and improvement.
    Keywords: measurement, performance, organization
    JEL: M11 M21 O31
    Date: 2014–10
  11. By: Hahn, Youjin; Islam, Asadul; Patacchini, Eleonora; Zenou, Yves
    Abstract: We study the relationship between network centrality and educational outcomes using a field experiment in primary schools in Bangladesh. After obtaining information on friendship networks, we randomly allocate students into groups and give them individual and group assignments. We find that the groups that perform the best are those whose members have high Katz-Bonacich and key-player centralities. Leaders are mostly responsible for this effect, while bad apples have little influence. Group members' network centrality is also important in shaping individual performance. We show that network centrality captures non-cognitive skills, especially patience and competitiveness.
    Keywords: leaders; Network centrality; soft skills; team work
    JEL: A14 C93 D01 I20
    Date: 2015–05
  12. By: Fátima Diniz (Faculty of Economics, University of Coimbra, Portugal); Elias Soukiazis (Faculty of Economics, University of Coimbra and GEMF, Portugal)
    Abstract: The mould for plastics industry in Portugal is highly technological, innovative and modern, with a clear focus on exports. It is one of the most successful sectors in this country with high reputation in the world markets. The main aim of this study is to explain this success by detecting the main factors which determine the dynamic production structure of this industry and its transformation over time. Focus is given on the multiple aspects of human capital, such as work experience, learning by doing tendencies, innovation, dissemination of knowledge and business cooperation between companies that generate positive externalities in the production process. All these factors contribute significantly to explain the success this industry has achieved over the recent decades. A production function framework is employed in line with the neoclassical approach where human capital is the engine of growth as has been postulated by the endogenous growth theory. The production function is estimated by using unbalanced panel data and applied to a sample of firms operating in this industry, over the period 1987-2012. Our empirical evidence suggests that factors such as physical capital(cutting edge technology, including specific software) and quantitative as well as qualitative factors associated with human capital are the key factors explaining the production dynamics of the moulds industry in Portugal. Increasing returns to scale and human capital externalities are also identified as special characteristics in this sector.
    Keywords: Production function, economies to scale, human capital externalities, panel data, moulds industry.
    JEL: D24 D62 F43 I25
    Date: 2015–05

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.