nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒08‒13
twelve papers chosen by
Tommaso Reggiani
Universität zu Köln

  1. The Diversity of Personnel Practices and Firm Performance By Pedro S. Martins
  2. Performance Measurement and Incentive Intensity By Bayo-Moriones, Alberto; Galdon-Sanchez, Jose Enrique; Martinez-de-Morentin, Sara
  3. Management Earnings Forecasts as a Performance Target in Executive Compensation Contracts By Shota Otomasa; Atsushi Shiiba; Akinobu Shuto
  4. Do Female Executives Make a Difference? The Impact of Female Leadership on Gender Gaps and Firm Performance By Mario Macis; Fabiano Schivardi; Andrea Moro; Luca Flabbi
  5. The Impact of Digital Skills on Educational Outcomes: Evidence from Performance Tests By Laura Pagani; Gianluca Argentin; Marco Gui; Luca Stanca
  6. Human Capital Risk, Contract Enforcement, and the Macroeconomy By Krebs, Tom; Kuhn, Moritz; Wright, Mark L. J.
  7. Systemic flexibility and human capital development: the relationship between non-standard employment and workplace training By G. Guidetti; G. Pedrini
  8. Optimal Contracting with Reciprocal Agents in a Competitive Search Model By Maria Breitwieser
  9. A theory of wage setting behavior By Marco Fongoni; Alex Dickson
  10. The impact of secondary schooling in Kenya : a regression discontinuity analysis By Ozier,Owen
  11. Multidimensional Skills, Sorting, and Human Capital Accumulation By Fabien Postel-Vinay; Jeremy Lise
  12. People and Machines: A Look at the Evolving Relationship Between Capital and Skill in Manufacturing 1860-1930 Using Immigration Shocks By Lafortune, Jeanne; Tessada, José; Lewis, Ethan Gatewood

  1. By: Pedro S. Martins
    Abstract: Personnel economics tends be based on single-firm case studies. Here we examine the personnel practices of nearly 5,000 firms, over a period of 20 years, using detailed matched employer-employee panel data from Portugal. In the spirit of Baker et al (1994a, b), we consider different dimensions of personnel management within each firm: worker turnover, the role of job levels and human capital as wage determinants, the dispersion of wages within job levels, the importance of tenure in terms of promotions and exits, and the scope for careers. We find a large degree of diversity in most of these practices across firms. Moreover, some personnel practices are shown to be robust predictors of higher levels of firm performance, even after controlling for time-invariant firm heterogeneity and other variables: low wage dispersion at low and intermediate job levels and a tight relationship between human capital variables and wages.
    Keywords: Personnel Economics, Job Levels, Wages, Big Data
    JEL: M51 M52 J31
    Date: 2015–08
  2. By: Bayo-Moriones, Alberto (University of Navarra); Galdon-Sanchez, Jose Enrique (Universidad Pública de Navarra); Martinez-de-Morentin, Sara (Universidad Pública de Navarra)
    Abstract: This study addresses the factors that determine the intensity of pay for performance schemes. The results indicate that the use of individual and group incentives boost intensity, whereas plant or firm pay for performance do not seem to affect the variable of interest. In addition, the adoption of measures of results, such as productivity or quality, has a significant positive effect on intensity. On the contrary, measures of human resource management outcomes, subjective measures and financial measures are not significant or have a negative effect on the intensity of pay for performance.
    Keywords: pay for performance
    JEL: J30 M52 M12
    Date: 2015–07
  3. By: Shota Otomasa (Kansai University); Atsushi Shiiba (Osaka University); Akinobu Shuto (The University of Tokyo)
    Abstract: This paper investigates whether and how Japanese firms use management earnings forecasts as a performance target for determining executive cash compensation. Consistent with the implications of the principal?agent theory, we find that the sensitivity of executive cash compensation varies with the extent to which realized earnings exceed initial management forecasts. In particular, we find that, for a sample of Japanese firms comprising 14,899 firm-year observations from 2005 to 2012, the executive cash compensation is positively related to management forecast error (MFE). Moreover, we show that the relationship between executive cash compensation and MFE strengthens when realizing positive MFEs despite aggressive initial forecasts. Overall, we find that initial management forecasts can be used as a performance target in executive compensation contracts. These findings also suggest that management earnings forecasts are important for improving contract efficiency as well as for providing useful information to investors in the capital market.
    Date: 2015–07
  4. By: Mario Macis (Johns Hopkins University); Fabiano Schivardi (Bocconi University); Andrea Moro (Vanderbilt University and Universita  Ca' Foscari di Venezia); Luca Flabbi (IDB)
    Abstract: We analyze a matched employer-employee panel data set and find that female leadership has a positive effect on female wages at the top of the distribution, and a negative one at the bottom. Moreover, performance in firms with female leadership increases with the share of female workers. This evidence is consistent with a model where female executives are better equipped at interpreting signals of productivity from female workers. This suggests substantial costs of under-representation of women at the top: for example, if women became CEOs of firms with at least 20% female employment, sales per worker would increase 6.7%.
    Date: 2015
  5. By: Laura Pagani; Gianluca Argentin; Marco Gui; Luca Stanca
    Abstract: Digital skills are increasingly important for labor market outcomes and social participation. Do they also matter for academic performance? This paper investigates the effects of digital literacy on educational outcomes by merging data from the Italian National Assessment in secondary schools with an original data set on performance tests of Internet skills for 10th grade students. Our identification strategy relies on a rich set of individual, family, school and classroom control variables that are not commonly available in previous studies. The findings indicate that, overall, Internet skills have a positive impact on academic achievement. This effect is stronger for students with low academic performance or low family background. It is also stronger for students in technical or vocational schools.
    Keywords: Human capital, Academic achievement, Digital skills, Internet skills, Digital divide
    JEL: I21 J13 J24
    Date: 2015–07
  6. By: Krebs, Tom (University of Mannheim); Kuhn, Moritz (University of Bonn); Wright, Mark L. J. (Federal Reserve Bank of Chicago)
    Abstract: We use data from the Survey of Consumer Finance and Survey of Income Program Participation to show that young households with children are under-insured against the risk that an adult member of the household dies. We develop a tractable macroeconomic model with human capital risk, age-dependent returns to human capital investment, and endogenous borrowing constraints due to the limited pledgeability of human capital. We show analytically that, consistent with the life insurance data, in equilibrium young households are borrowing constrained and under-insured. A calibrated version of the model can quantitatively account for the life-cycle variation of life-insurance holdings, financial wealth, earnings, and consumption inequality observed in the US data. Our analysis implies that a reform that makes consumer bankruptcy more costly, like the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, leads to a substantial increase in the volume of both credit and insurance.
    Keywords: human capital risk, limited enforcement, life insurance
    JEL: E21 E24 D52 J24
    Date: 2015–07
  7. By: G. Guidetti; G. Pedrini
    Abstract: The aim of this paper is to explore the relationship between non-standard contracts (part-time, fixed-term) and workplace training by discussing the implications of two different theoretical frameworks grounding on human capital theory and strategic management, respectively. To achieve this purpose we develop alternative hypothesis on the association between the presence of non-standard workers and four different outcome variables related to workplace training and job-related practices. By using data on Italian firms we get different results according to the type of non-standard contract and training. Part-time and temporary contracts carry out distinct functions with respect to off-the job training as far as labour flexibility is concerned. On the other hand, although non-standard work seems to be unrelated to on-the-job training decisions, this is not the case when the overall number of job-related practices is taken into account. Overall, our evidence can reflect the decision to substitute off-the-job training with job-related practices in presence of part-time workers. Conversely, the recourse to temporary employment can be associated with the need to enhance systemic flexibility throughout the organization.
    JEL: J24 M53 M54
    Date: 2015–07
  8. By: Maria Breitwieser (Department of Economics, GSDS, University of Konstanz, Germany)
    Abstract: The presented paper offers a simple search model of the labor market to explain the empirical findings on the role of reciprocity for labor market outcomes as reported by Dohmen et al. (2009). In an agency setting where profit-maximizing firms compete for heterogeneous reciprocal workers, with full information about workers’ types, reciprocal workers who are willing to engage in gift exchange are approached by more firms, get higher wages and exert higher efforts than selfish workers.
    Keywords: reciprocity, gift exchange, competitive search equilibrium, optimal contracts, wage differentials, unemployment
    JEL: D03 D21 E24 J31 J64
    Date: 2015–07–28
  9. By: Marco Fongoni (Department of Economics, University of Strathyclyde); Alex Dickson (Department of Economics, University of Strathyclyde)
    Abstract: Concerns for fairness, workers' morale and reciprocity influence firms' wage setting policy. In this paper we formalize a theory of wage setting behavior in a simple and tractable model that explicitly considers these behavioral aspects. A worker is assumed to have reference-dependent preferences and displays loss aversion when evaluating the fairness of a wage contract. The theory establishes a wage-effort relationship that captures the worker's reference-dependent reciprocity, which in turn influences the firm's optimal wage policy. The paper makes two key contributions: it identifies loss aversion as an explanation for a worker's asymmetric reciprocity; and it provides realistic and generalized microfoundation for downward wage rigidity. We further illustrate the implications of our theory for both wage setting and hiring behavior. Downward wage rigidity generates several implications for the outcome of the initial employment contract. The worker's reference wage, his extent of negative reciprocity and the firms’ expectations are key drivers of the propositions derived.
    Keywords: reference dependence, loss aversion, morale, reciprocity, employment contract, downward wage rigidity, wage setting behavior
    JEL: C78 J30 J41
    Date: 2015–07
  10. By: Ozier,Owen
    Abstract: This paper estimates the impacts of secondary school on human capital, occupational choice, and fertility for young adults in Kenya. The probability of admission to government secondary school rises sharply at a score close to the national mean on a standardized 8th grade examination, permitting the estimation of causal effects of schooling in a regression discontinuity framework. The analysis combines administrative test score data with a recent survey of young adults to estimate these impacts. The results show that secondary schooling increases human capital, as measured by performance on cognitive tests included in the survey. For men, there is a drop in the probability of low-skill self-employment, as well as suggestive evidence of a rise in the probability of formal employment. The opportunity to attend secondary school also reduces teen pregnancy among women.
    Keywords: Public Examination System,Education For All,Population Policies,Secondary Education,Tertiary Education
    Date: 2015–08–06
  11. By: Fabien Postel-Vinay (UCL); Jeremy Lise (UCL)
    Abstract: We construct a structural model of on-the-job search in which workers differ in skills along several dimensions (cognitive, manual, interpersonal) and sort themselves into jobs with heterogeneous skill requirements along those same dimensions. We further allow for skills to be accumulated when used, and eroded away when not used. We estimate the model using occupation-level measures of skill requirements based on O*NET data, combined with a worker-level panel from the NLSY79. We use the estimated model to shed light on the origins and costs of mismatch along the cognitive, manual, and interpersonal skill dimensions. Our results clearly suggest that those three types of skills are very different productive attributes.
    Date: 2015
  12. By: Lafortune, Jeanne (Pontificia Universidad Catolica de Chile); Tessada, José (Pontificia Universidad Catolica de Chile); Lewis, Ethan Gatewood (Dartmouth College)
    Abstract: This paper estimates the elasticity of substitution between capital and skill using variation across U.S. counties in immigration-induced skill-mix changes between 1860 and 1930. We find that capital began as a q-complement for skilled and unskilled workers, and then dramatically increased its relative complementary with skilled workers around 1890. Simulations of a parametric production function calibrated to our estimates imply the level of capital-skill complementarity after 1890 likely allowed the U.S. economy to absorb the large wave of less-skilled immigration with a modest decline in less-skilled relative wages. This would not have been possible under the older production technology.
    Keywords: immigration, capital-skill complementarity, skill-biased technical change, manufacturing, Second Industrial Revolution
    JEL: J24 N61 O33
    Date: 2015–07

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