nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2015‒12‒20
fifteen papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. How worker participation affects reciprocity under minimum remuneration policies: Experimental evidence By Köhler, Katrin; Pagel, Beatrice; Rau, Holger A.
  2. Profits, R&D and labour: Breaking the law of diminishing returns to labour By Sara Amoroso
  3. Where Are the Returns to Lifelong Learning? By Michael Coelli; Domenico Tabasso
  4. Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field By Lackner, Mario; Stracke, Rudi; Sunde, Uwe; Winter-Ebmer, Rudolf
  5. Human Capital on the High Seas - Job Mobility and Returns to Technical Skill During Industrialization By Glaser, Darrell; Rahman, Ahmed
  6. Time and job satisfaction: a longitudinal study of the differential roles of age and tenure By Shoshana Dobrow Riza; Yoav Ganzach; Yihao Liu
  7. The Production and Stock of College Graduates for U.S. States By John V. Winters
  8. Flexible contracts By Piero Gottardi; Jean-Marc Tallon; Paolo Ghirardato
  9. How costly is corporate bankruptcy for the CEO? By Eckbo, B Espen; Thorburn, Karin S; Wang, Wei
  10. 'Threshold Effects of Human Capital: Schooling and Economic Growth' By Humna Ahsana; M. Emranul Haque
  11. Does CEO fitness matter? By Limbach, Peter; Sonnenburg, Florian
  12. Remember Me? A Field Study on Memory Biases in Academia By Michele Belot; Marina Schroeder
  13. Escaping the Holocaust: Human and health capital of refugees to the United States, 1940-42 By Blum, Matthias; Rei, Claudia
  14. Worker cooperatives, a status to survive in a changing world or a status to change the world? Spain and France, two worldviews on worker cooperatives By Sandrine STERVINOU; Julie BAYLE-CORDIER; Lorea NARVAIZA; Cristina ARAGON; Cristina ITURRIOZ
  15. Information, authority, and smooth communication in organizations By Deimen, Inga; Szalay, Dezso

  1. By: Köhler, Katrin; Pagel, Beatrice; Rau, Holger A.
    Abstract: We analyze the role of worker participation for the success of minimum remuneration policies. In our experiments employers remunerate workers doing a real-effort task. We vary the way how a minimum remuneration policy is introduced. In the worker-participation treatment, workers bargain with the employer on the enforcement of the policy. In the control treatment the policy is exogenously introduced. We find a pronounced effort increase after the policy was enforced. An exogenous introduction has detrimental effects, i.e., employers frequently pay a premium to maintain performance. Thus, worker participation may be an effective means for maintaining reciprocity under minimum remuneration policies.
    Keywords: bargaining,experiment,real effort,worker participation
    JEL: C91 J31 J33 M52
    Date: 2015
  2. By: Sara Amoroso (European Commission – JRC - IPTS)
    Abstract: A basic assumption in the economic literature is the one of diminishing marginal returns to labour. However, theoretical studies on knowledge and labour specialization assume that an increase in the knowledge investment embodied in the human capital of workers raises the marginal product of labour. In this paper, we propose a structural approach to test the hypothesis of non-diminishing returns to labour for a panel data set of R&D investing companies, and we explore how the marginal returns to labour vary with their level of knowledge capital (R&D) intensity. Our econometric analysis provides a number of results. First, we find that more knowledge intensive firms have non-diminishing returns to labour, while less knowledge intensive companies exhibit diminishing returns. Second, independently from the knowledge capital intensity, returns to labour increase with size. Relatively smaller firms have diminishing returns, while larger companies have non-diminishing to increasing returns to labour. However, we show that more knowledge intensive firms can attain the threshold of non-diminishing returns faster than their counterparts.
    Keywords: size, specialization, profitability, profit function
    JEL: J24 L10 L25 O30
    Date: 2015–12
  3. By: Michael Coelli (Department of Economics, The University of Melbourne); Domenico Tabasso (Geneva School of Economics and Management, University of Geneva; Swiss National Centre for Competence in Research LIVES (NCCR LIVES); and Institute for the Study of Labor (IZA))
    Abstract: We investigate the labour market determinants and outcomes of adult participation in formal education (lifelong learning) in Australia, a country with high levels of adult education. Employing longitudinal data and mixed effects methods allows identification of effects on outcomes free of ability bias. Different trends in outcomes across groups are also allowed for. The impacts of adult education differ by gender and level of study, with small or zero labour market returns in many cases. Wage rates only increase for males undertaking university studies. For men, vocational education and training (VET) leads to higher job satisfaction and fewer weekly hours. For women, VET is linked to higher levels of satisfaction with employment opportunities and higher employment probabilities. Classification-J24, J28, I23, I28
    Keywords: Adult education, lifelong learning, vocational studies, returns to education
    Date: 2015–11
  4. By: Lackner, Mario; Stracke, Rudi; Sunde, Uwe; Winter-Ebmer, Rudolf
    Abstract: This paper investigates empirically whether decision makers are forward looking in dynamic strategic interactions. In particular, we test whether decision makers in multi-stage tournaments take heterogeneity induced changes of continuation values and the ability of their immediate opponent into account when choosing effort. Using data from professional and semi-professional basketball tournaments, we find that effort is negatively affected by the ability of the current opponent, consistent with the theoretical prediction and previous evidence. More importantly, the results indicate that the expected relative strength in future interactions does affect behavior in earlier stages, which provides support for the `standard' view that decision makers are forward looking in dynamic strategic interactions.
    Keywords: forward-looking behavior; heterogeneity; multi-stage contest; promotion tournament
    JEL: D84 D90 J33 M51
    Date: 2015–12
  5. By: Glaser, Darrell; Rahman, Ahmed
    Abstract: This paper examines the effects of engineer-oriented and technical experience on job mobility during an era known for its rapid technological innovation and capital advancements: the late nineteenth and early twentieth centuries. We first develop an on-the-job search model to help us understand factors leading to job switching under rigid payment systems. Then, using longitudinal data on British and American naval officer- and engineer-careers, we demonstrate how ceteris paribus earnings-increases through promotions can decrease the probability of job switching. We also show how different forms of technical experience affect probabilities of job switching. Combining both insights and following a Topel and Ward (1992) based empirical framework, we find various rates of return to engineering and technical experience comparable to rates of return found today. To our knowledge these are the earliest historic estimates of returns to any type of technical skill.
    Keywords: human capital; job mobility; search theory; technological change; military personnel; naval history; skill premium
    JEL: J45 J6 J62 N3
    Date: 2015–11
  6. By: Shoshana Dobrow Riza; Yoav Ganzach; Yihao Liu
    Abstract: The relationship between job satisfaction and time is a fundamental question in organizational behavior. Yet, given inconsistent results in the literature, the nature of this relationship has remained unresolved. Scholars' understanding of this relationship has been limited because studies have generally not simultaneously considered the two primary time metrics in job satisfaction research – age and tenure – and have instead relied on cross-sectional research designs. In this study, we develop and test an empirical model to provide a more definitive answer to the question of how age and tenure relate to job satisfaction. Our analyses draw on longitudinal data from 21,670 participants spanning a total of 34 waves of data collection across 40 years in two nationally representative samples. Multilevel analyses indicate that people became less satisfied as their tenure within a given organization increased, yet as people aged – and transitioned from organization to organization – their satisfaction increased. We also found that job rewards, as exemplified by pay, mediated these relationships. We discuss empirical, theoretical and practical implications of our findings.
    Keywords: job satisfaction; time; age; tenure; pay; longitudinal study
    JEL: R14 J01
    Date: 2015
  7. By: John V. Winters (Oklahoma State University)
    Abstract: The stock of human capital in an area is important for regional economic growth and development. However, highly educated workers are often quite mobile, and there is a concern that public investments in college graduates may not benefit the state if the college graduates leave the state after finishing their education. This paper examines the relationship between the production of college graduates from a state and the stock of college graduates residing in the state using microdata from the decennial census and American Community Survey. The relationship is examined across states and across cohorts within states. The descriptive analysis suggests that the relationship between the production and stock of college graduates has increased over time and is nearly proportional in recent years. Instrumental variables methods are used to estimate causal effects. The preferred instrumental variables results yield an average point estimate for the production-stock relationship of 0.52, but the effect likely decreases with age.
    Keywords: college graduates; human capital; migration; higher education policy
    JEL: I25 J24 R23
    Date: 2015–09
  8. By: Piero Gottardi (European University Institute - Department of Economics); Jean-Marc Tallon (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Paolo Ghirardato (Collegio Carlo Alberto - Via Real Collegio 30)
    Abstract: This paper studies the costs and benefits of delegating decisions to superiorly informed agents, that is of adopting flexible contracts, relative to the use of rigid, non discretionary contracts. The main focus of the paper lies in the analysis of the costs of delegation, primarily agency costs, versus their benefits, primarily the flexibility of the action choice in two different environments, one with risk and one with ambiguity. We first determine and characterize the properties of the optimal flexible contract. We then show that the higher the agent's degree of risk aversion, the higher is the agency costs of delegation and the less profitable a flexible contract relative to a rigid one. When the parties have imprecise probabilistic beliefs, the agent's degree of imprecision aversion introduces another agency cost, which again reduces the relative profitability of flexible contracts. JEL Classification: D86, D82, D81.
    Keywords: Agency Costs,Delegation,Flexibility,Imprecision Aversion,Multiple Priors
    Date: 2015–12–04
  9. By: Eckbo, B Espen; Thorburn, Karin S; Wang, Wei
    Abstract: We examine CEO career and compensation changes for firms filing for Chapter 11. One-third of the incumbent CEOs maintain executive employment, and these CEOs experience a median compensation change of zero. However, incumbent CEOs leaving the executive labor market suffer a compensation loss with a median present value until age 65 of $7 million (five times pre-departure compensation). The likelihood of leaving decreases with profitability and CEO share ownership. Furthermore, creditor control rights during bankruptcy (through debtor-in-possession financing and large trade credits) appear to effect CEO career change. Despite large equity losses (median $11 million for incumbents who stay until filing), the median incumbent does not reduce his stock ownership as the firm approaches bankruptcy.
    Keywords: career change; CEO compensation; labor market capital; personal bankruptcy costs; turnover; wealth loss
    JEL: G33 G34 M12
    Date: 2015–12
  10. By: Humna Ahsana; M. Emranul Haque
    Abstract: Many recent studies have found average years of schooling to be unrelated with economic growth. In this note, we show that the significant positive effect of schooling can only be realised after an economy crosses a threshold level of development.
    Date: 2015
  11. By: Limbach, Peter; Sonnenburg, Florian
    Abstract: This study provides evidence suggesting that CEOs' physical fitness has a positive impact on firm value, consistent with the beneficial effects of fitness on, e.g., cognitive functions, stress coping and job performance. For each of the years 2001 to 2011, we define S&P 1500 CEOs as fit if they finish a marathon. CEO fitness is also associated with higher firm profitability and higher M&A announcement returns. Our identification strategy includes CEO-firm fixed effects, instrumental variables, permutation tests, random effects, and time-varying CEO, firm and industry effects. An additional analysis of sudden CEO deaths, based on a fitness measure not limited to running, confirms our results.
    Keywords: CEO heterogeneity,firm value,mergers and acquisitions,physical fitness
    JEL: G32 G34 J24
    Date: 2015
  12. By: Michele Belot (University of Edinburgh); Marina Schroeder (University of Cologne)
    Abstract: Are some people more memorable than others? We conduct an experiment in a real work setting - academia. A month after two international conferences, participants are asked to recall presenters' names, institutions and the papers they presented. We find that people recall distinctive "minority" attributes of presenters (such as being female or non-white) and better recall identities of ethnic minorities. In contrast, academic achievements have little explanatory power on the probability of being remembered. These findings provide evidence for a potential value of standing out and have implications for our understanding of the formation of professional networks.
    Keywords: memory, discrimination, field experiment
    JEL: C93 D83 J15 J16
  13. By: Blum, Matthias; Rei, Claudia
    Abstract: The large-scale persecution of Jews during World War II generated massive refugee movements. Using data from 20,441 predominantly Jewish passengers from 19 countries traveling from Lisbon to New York between 1940 and 1942, we analyze the last wave of refugees escaping the Holocaust and verify the validity of height as a proxy for human and health capital. We further show this episode of European migration displays well-known features of migrant self-selection: early migrants were taller than late migrants; a large migrant stock reduces migrant selectivity; and economic barriers to migration apply. Our findings show that Europe experienced substantial losses in human and health capital while the US benefitted from the immigration of European refugees.
    Keywords: migration,refugees,World War II,Holocaust,Germany,New York
    JEL: N32 N34 N42 N44 F22 J24 O15
    Date: 2015
  14. By: Sandrine STERVINOU (Audencia Nantes-PRES-LUNAM, Nantes, France); Julie BAYLE-CORDIER (IESEG School of Management-LEM-CNRS, Paris, France); Lorea NARVAIZA (DBS – University of Deusto, Sebastián, Spain); Cristina ARAGON (DBS – University of Deusto, Sebastián, Spain); Cristina ITURRIOZ (DBS – University of Deusto, Sebastián, Spain)
    Abstract: Since the recent crisis, the resilience of worker cooperatives has not gone unnoticed in Europe (Cecop, 2012). In France this renewed interest in worker cooperatives has led to a new law in 2013 promoting this model of enterprise based on democratic governance. The legal status of worker cooperatives implies that such organizational forms are characterised by a double mission: to be profitable in order to maintain their activity and to be responsible vis-à-vis employees and towards their community. Such hybrid mission implies that such firms may be viewed as social enterprises. In this context, we use Austin & al.’s (2006) framework in order to assess how leaders of French and Spanish worker cooperatives make sense of who they are in terms of social or commercial entrepreneurship. Our study is based on a series of twenty semistructured interviews conducted with founders and / or leaders of worker cooperatives, from the Western region of France and the Basque country in Spain. Both regions are known for the large number of employee-owned cooperatives in their own country. Findings show that French and Spanish leaders of worker cooperatives have very different ways of making sense of what a worker cooperative stands for. In Spain, managers’ worldview is pragmatic and instrumental as the benefits mentioned are lower taxes, work flexibility, higher empowerment of workers and a great emphasis placed on of the role of the client. In France, managers’ worldview is more normative and ideological and less commercial/instrumental as they frame the worker cooperative as an alternative model to the classical capitalist enterprise, stressing the importance of workers, labor compensation and democratic governance.
    Keywords: Worker cooperatives, social entrepreneurship, Spain, France
    Date: 2015
  15. By: Deimen, Inga; Szalay, Dezso
    Abstract: Two divisions of a firm, overarched by a headquarters, are engaged in a decision problem. Division one obtains information and informs division two who has the formal authority to make the decision. Headquarters guides the decision process by affecting the quality of information that division one obtains. In equilibrium, division one honestly communicates the inferences drawn from its observations, but not the underlying observations themselves and division two takes the advice at face value. The communication equilibrium involves smooth strategies and is outcome equivalent to delegation: the informed party gets its way, regardless of the allocation of formal authority.
    Keywords: authority; delegation; endogenous information; strategic communication
    JEL: D82
    Date: 2015–12

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