nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒10‒17
twelve papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. More effort with less pay: On information avoidance, belief design and performance By Huck, Steffen; Szech, Nora; Wenner, Lukas M.
  2. The triad of job satisfaction, work engagement and employee loyalty – The interplay among the concepts By Nina Pološki Vokić; Tomislav Hernaus
  3. Optimal Combination of Wage Cuts and Layoffs : The Unexpected Side Effect of a Performance-based Payment System By YOKOYAMA, Izumi; OBARA, Takuya
  4. Hierarchical Experimentation By Chia-Hui Chen; Junichiro Ishida
  5. Public Relative Performance Feedback in Complex Service Systems: Improving Productivity through the Adoption of Best Practices By Hummy Song; Anita L. Tucker; Karen L. Murrell; David R. Vinson
  6. Bilingual Schooling and Earnings: Evidence from a Language-in-Education Reform By Lorenzo Cappellari; Antonio Di Paolo
  7. An Experimental Evaluation of a Proactive Pastoral Care Initiative Within An Introductory University Course By Michael P. Cameron; Sialupapu Siameja
  8. Labour Force Participation, Human Capital and Wellbeing among Older New Zealanders By Michael P. Cameron; Peggy Koopman-Boyden; Matthew Roskruge
  9. Nudging Life Insurance Holdings in the Workplace By Harris, Timothy; Yelowitz, Aaron
  10. Automation, Performance and International Competition: Firm-level Comparisons of Process Innovation By Kromann, Lene; Sørensen, Anders
  11. A Model of Wage and Employment Effects of Service Offshoring By Tobal Martín
  12. To friends everything, to strangers the law? An experiment on contract enforcement and group identity By Marian Panganiban

  1. By: Huck, Steffen; Szech, Nora; Wenner, Lukas M.
    Abstract: In a tedious real effort task, subjects know that their piece rate is either low or ten times higher. When subjects are informed about their piece rate realization, they adapt their performance. One third of subjects nevertheless forego this instrumental information when given the choice - and perform stunningly well. Agents who are uninformed regarding their piece rate tend to outperform all others, even those who know that their piece rate is high. This also holds for enforced instead of self-selected information avoidance. All our findings can be captured by a model of optimally distorted expectations following Brunnermeier and Parker (2005).
    Keywords: Optimal Expectations,Belief Desing,Performance,Real Effort Task,Coarse Incentive Structures,Workplace Incentives
    JEL: D83 D84 J31 M52
    Date: 2015
  2. By: Nina Pološki Vokić (Faculty of Economics and Business, University of Zagreb); Tomislav Hernaus (Faculty of Economics and Business, University of Zagreb)
    Abstract: Job satisfaction, work engagement and employee loyalty are popular human resource (HR) concepts that significantly contribute to individual and organizational performance. While they have been widely studied, their interplay was rarely explored. Therefore, a field study was conducted on the sample of 567 employees from a large-sized Croatian organization. We have examined the interaction among job satisfaction, work engagement and employee loyalty. The correlation analysis revealed significant positive relationships between explored HR concepts. Single and multiple regressions showed that job satisfaction is a significant predictor of work engagement, while work engagement strongly predicts employee loyalty. Furthermore, a mediation analysis confirmed that work engagement mediates the relationship between job satisfaction and employee loyalty.
    Keywords: job satisfaction, work engagement, employee loyalty, Croatia, mediation analysis
    JEL: M5
    Date: 2015–10–07
  3. By: YOKOYAMA, Izumi; OBARA, Takuya
    Abstract: In this paper, we theoretically and empirically analyze the optimal combination of wage cuts and layoffs, and the unexpected effect of introducing a performance-based payment system. First, we theoretically show that with the increase in the parameter representing a firm's estimate of the degree to which nominal wage cuts damage worker morale, the firm becomes less likely to impose wage cuts; instead, it implements layoffs. Empirically, we show that there is a trend that a firm under a performance-based payment system is unlikely to implement wage cuts, because the system acts as a device for strengthening the relationship between wages and worker morale. Given this first-order regression, the status of a performance-based payment system is employed as an instrumental variable (IV) for wage cuts in a layoff regression model, and the IV estimate for the impact of wage cuts on layoffs becomes significantly negative. This supports the theoretical implication that implementing wage cuts can be a potential device to reduce layoffs. At the same time, we find another potential problem: an unexpected side effect of the increasing use of a performance-based payment system in Japan is that layoffs will increase, because companies will become less likely to impose wage cuts. This in turn may lead to a high unemployment rate in Japan, where the fluidity of the labor market is not as advanced as that in the United States.
    Keywords: Layoffs, Wage cut, Performance pay system
    JEL: J30 J33 J63
    Date: 2015–10
  4. By: Chia-Hui Chen; Junichiro Ishida
    Abstract: We consider a bandit problem faced by a team of two heterogeneous players. The team is hierarchical in that one (the principal) retains the exclusive right to terminate the project while the other (the agent) focuses strictly on implementing the project assigned to him. As a key departure, we assume that the principal may be privately informed about the project quality. In contrast to the existing literature, the belief in our model is generally non-monotonic: while each failure makes the agent less confident in the project, the uninformed principal drops out gradually over time, which partially restores his confidence. We derive explicit solutions for the agent's effort and the principal's exit decisions, which allow us to obtain a full characterization of the equilibrium. We also discuss the role of effort monitoring in this context and suggest a new rationale for delegation.
    Date: 2015–10
  5. By: Hummy Song (Harvard University); Anita L. Tucker (Brandeis University); Karen L. Murrell (Kaiser Permanente); David R. Vinson (Kaiser Permanente)
    Abstract: Managers of service organizations seek to improve productivity without eroding service quality. We explore whether privately versus publicly disclosing relative performance feedback (RPF) about individual workers' processing times can help achieve this goal. Using three years of patient encounter data from two emergency departments, one of which changed from privately to publicly disclosing RPF to physicians, we find an 8.6% improvement in productivity and no significant reduction in quality associated with implementing public RPF. This benefit is greater when workers are carrying out understandardized, rather than standardized, tasks. We conduct further analyses that suggest the benefit of public RPF may primarily stem from the identification and diffusion of best practices around workflow, rather than from the motivation to be top-ranked or the shame of being bottom-ranked. Thus, our results suggest public RPF can foster the sharing and adoption of strategies for improving the management of workflow.
    Keywords: productivity, workflow, relative performance feedback, best practice transfer, empirical operations
    Date: 2015–10
  6. By: Lorenzo Cappellari; Antonio Di Paolo
    Abstract: We exploit the 1983 language-in-education reform that introduced Catalan alongside Spanish as medium of instruction in Catalan schools to estimate the labour market value of bilingual education. Identification is achieved in a difference-in-differences framework exploiting variation in exposure to the reform across years of schooling and years of birth. We find positive wage returns to bilingual education and no effects on employment, hours of work or occupation. Results are robust to education-cohort specific trends or selection into schooling and are mainly stemming from exposure at compulsory education. We show that the effect worked through increased Catalan proficiency for Spanish speakers and that there were also positive effects for Catalan speakers from families with low education. These findings are consistent with human capital effects rather than with more efficient job search or reduced discrimination. Exploiting the heterogeneous effects of the reform as an instrument for proficiency we find sizeable earnings effects of skills in Catalan.
    Keywords: bilingual education, returns to schooling, language-in-education reform, Catalonia
    JEL: J24 J31 I28
    Date: 2015–10
  7. By: Michael P. Cameron (University of Waikato); Sialupapu Siameja (University of Waikato)
    Abstract: Improving student retention and academic performance is a key objective for higher education institutions, and finding effective interventions for assisting with at-risk students is therefore important. In this paper we evaluate a proactive pastoral care intervention that was trialled in an introductory economics course. We first identified students at high risk of failure, and then randomised these students into two treatment groups and a control group. The first treatment group received an email with information about academic support, while the second treatment group received the email as well as a personal telephone call to follow up. In evaluating the impact of the intervention trial, we found that the first intervention did not significantly improve student outcomes, but the second intervention did improve outcomes in one of the two semesters evaluated. However, the statistically insignificant results were positive and statistical insignificance may be due to a lack of statistical power. Overall, the initiative was a qualified success. It is both simple and cost-effective, and should be considered for wider implementation and further evaluation.
    Keywords: academic performance; pastoral care; student retention; randomised-controlled trial; New Zealand
    JEL: A22 I21
    Date: 2015–09–13
  8. By: Michael P. Cameron (University of Waikato); Peggy Koopman-Boyden (University of Waikato); Matthew Roskruge (University of Waikato)
    Abstract: Along with many other countries, New Zealand is experiencing a rapid rise in the population of older people, both in absolute terms and also as a percentage of the overall population. Older people are increasingly likely to participate in formal employment beyond the age of pension eligibility (65 years in New Zealand). Earlier research has showed that working full-time reduces life satisfaction among New Zealanders 65 years and older, and that this relationship is robust to the inclusion of measures of job satisfaction or the desire to work more or fewer hours. In this paper we investigate the relationship between labour force participation and life satisfaction among older New Zealanders, with specific focus on the mediating role of human capital in the relationship. We utilise data from several waves of the New Zealand General Social Survey (n=5856), and account for the bias due to selection effects and endogeneity using instrumental variables analysis, and control for mental and physical health. Our identification strategy is to use gender, regional-level employment rates, and migration rates as instruments for labour force status. Our results suggest that, should improving wellbeing for older people become an explicit government priority, investing in reducing the push factors for older people to remain in the full-time employment may improve wellbeing.
    Keywords: labour force participation; retirement; subjective wellbeing; life satisfaction; human capital; New Zealand
    JEL: I31 J14 J21 J24
    Date: 2015–09–30
  9. By: Harris, Timothy; Yelowitz, Aaron
    Abstract: Using administrative data from a large public university, we analyze a policy designed to increase employer-sponsored life insurance. The University always had a supplemental life insurance plan available for its workers. In 2008, it increased its provision of basic coverage from a $10,000 to 1x salary. Workers initially paying for supplemental life insurance were in a position to completely undo the increase in basic coverage by scaling back supplemental elections, yet their default choice in 2008 was to continue at their existing level from 2007. The increased provision of basic coverage therefore represents a nudge for employees to increase life insurance. The nudge increased life insurance holdings one-for-one, both in the short and long-run, even for workers who actively made changes to other fringe benefits. New hires, who had to make an active choice, elected less supplemental coverage after 2008 relative to earlier cohorts of new hires, providing additional evidence of a significant degree of inertia among existing workers. Additionally, we find evidence of inertia for high earners constrained by the maximum limits. Data from a national sample of job changers show minimal crowd-out of individual market coverage from increased employer- sponsored life insurance. Further, we discuss the desirability of the nudge and find that the increase in basic coverage decreased life insurance dis- parities for two-thirds of employees
    Keywords: Life Insurance, Inertia
    JEL: D03 D31 G22 H20 J32 J33 J38
    Date: 2015–10–09
  10. By: Kromann, Lene (Department of Economics, Copenhagen Business School); Sørensen, Anders (Department of Economics, Copenhagen Business School)
    Abstract: This paper presents new evidence on tradeinduced automation in manufacturing firms using unique data combining a retrospective survey that we have assembled with register data for 2005-2010. In particular, we establish a causal effect where firms that have specialized in product types for which the Chinese exports to the world market has risen sharply invest more in automated capital compared to firms that have specialized in other product types. We also study the relationship between automation and firm performance and find that firms with high increases in scale and scope of automation have faster productivity growth than other firms. Moreover, automation improves the efficiency of all stages of the production process by reducing setup time, run time, and inspection time and increasing uptime and quantity produced per worker. The efficiency improvement varies by type of automation.  
    Keywords: automation; productivity; production theory; efficiency
    JEL: D24 L11 L22 O33
    Date: 2015–10–01
  11. By: Tobal Martín
    Abstract: This article shows that a skill-abundant country with a relatively high productivity has larger incentives to offshore unskilled than skilled intensive tasks (services), even though no assumption on the correlation between the degree of tradability and skill-intensity of the tasks is made. Assuming putty-clay technology that locks labor into tasks in the short run, it is shown that service offshoring yields wage and employment effects in the long run. These effects switch from negative to positive as the degree of tradability declines, being the switch for a large degree of tradability in the case of the skilled intensive tasks. The results are consistent with an emerging empirical literature that studies the effects of service offshoring on wages and employment.
    Keywords: Service offshoring; Trade in Tasks; Skill-intensity.
    JEL: J24 L24
    Date: 2015–05
  12. By: Marian Panganiban (Max Planck Institute for Research on Collective Goods, Bonn, and Friedrich-Schiller-Universität, Jena)
    Abstract: Although the role of formal and informal institutions in promoting economic growth and sustaining exchange relations is now well established, explaining and differentiating how informal and formal rules affect individual behavior remain a challenge. This study aims to distill the essential characteristics of formal and informal institutions and disentangle their effects on trust and performance in exchange relations through a laboratory experiment. Formal institutions are modeled as third-party contract enforcement while informal institutions are represented as shared group identity. Results show that trust choices increase as contract enforcement increases but are not affected by shared group identity. However, performance is more likely to occur in interactions with in-group members than out-group members.
    Keywords: institutions, exchange relations, contract enforcement, group identity, laboratory experiments
    JEL: C72 C91 D03 D81
    Date: 2015–10–09

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