nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒02‒04
nine papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. Data in Action: Data-Driven Decision Making in U.S. Manufacturing By Erik Brynjolfsson; Kristina McElheran
  2. Firms' Incentive Provisions: Tournament Structure and Worker Flow By Kambayashi, Ryo; Ueno, Yuko
  3. Quota bonuses as localized sales bonuses By Bakó, Barna; Kálecz-Simon, András
  5. Is decline in employment the outcome or cause of crisis in Italy? By Emiliano Mandrone; Manuel Marocco; Debora Radicchia
  6. Back to Background Risk By Andreas Fagereng; Luigi Guiso; Luigi Pistaferri
  7. Policing, Schooling and Human Capital Accumulation By Ivan G. Lopez Cruz
  8. Human Capital. Some critical considerations about its definition and measures By Sebastiano Fadda
  9. Organizational Belief, Managerial Vision, and International Trade By Jaewon Jung

  1. By: Erik Brynjolfsson; Kristina McElheran
    Abstract: Manufacturing in America has become significantly more data-intensive. We investigate the adoption, performance effects and organizational complementarities of data-driven decision making (DDD) in the U.S. Using data collected by the Census Bureau for 2005 and 2010, we observe the extent to which manufacturing firms track and use data to guide decision making, as well as their investments in information technology (IT) and the use of other structured management practices. Examining a representative sample of over 18,000 plans, we find that adoption of DDD is earlier and more prevalent among larger, older plants belonging to multi-unit firms. Smaller single-establishment firms adopt later but have a higher correlation with performance than similar non-adopters. Using a fixed-effects estimator, we find the average value-added for later DDD adopters to be 3% greater than non-adopters, controlling for other inputs to production. This effect is distinct from that associated with IT and other structured management practices and is concentrated among single-unit firms. Performance improves after plants adopt DDD, but not before – consistent with a causal relationship. However, DDD-related performance differentials decrease over time for early and late adopters, consistent with firm learning and development of organizational complementarities. Formal complementarity tests suggest that DDD and high levels of IT capital reinforce each other, as do DDD and skilled workers. For some industries, the benefits of DDD adoption appear to be greater for plants that delegate some decision making to frontline workers.
    Date: 2016–01
  2. By: Kambayashi, Ryo; Ueno, Yuko
    Abstract: This study aims to empirically examine how establishments employ various tools, including promotion, threat of dismissal, progressive base wages, and bonuses, to motivate workers. Starting with the standard tournament model, we incorporate the link between the tournament structure and the worker separation that affects the degree of internal competition for managerial positions. By using an establishment-level panel data set, we find that the average policy of human resource management in Japan, particularly since the global financial crisis, is consistent with tournament theory. Further, there is evidence that establishments use a positive selection scheme for determining the set of candidates. The progressive base wage schedule and the smaller portion of bonus payments for employees who remain are also consistent with the selection scheme.
    Keywords: Promotion tournament, internal competition, worker separation, wage progression
    JEL: M51 M52 J31 J63
    Date: 2015–12
  3. By: Bakó, Barna; Kálecz-Simon, András
    Abstract: Managerial bonus schemes and their effects on firm strategies and market outcomes are extensively discussed in the literature. Though quota bonuses are not uncommon in practice, they have not been analysed so far. In this article we compare quota bonuses to profit-based evaluation and sales (quantity) bonuses. In a duopoly setting with independent demand shocks we find that under certain circumstances choosing quota bonuses is a dominant strategy. This may explain the widespread use of quota bonuses in situations where incentive problems are relevant.
    Keywords: strategic delegation, oligopoly, managerial incentives
    JEL: C73 D21 D43 L13
    Date: 2015–12–23
  4. By: Vidhu Mohan; Dharna Sharma
    Abstract: The purpose of the present study was to examine the relationship of organizational climate with work motivation and organizational commitment of employees. The sample consisted of 313 middle and high rank managers from different private sector organizations (manufacturing and IT service) located in Punjab, Delhi, Gurgaon and Noida. Organizational climate measure (Patterson et al., 2005), Work motivation questionnaire (Dr. K.G.Aggarwal, 1988) and Organizational commitment questionnaire (Meyer and Allen, 1993) were used to measure organizational climate, work motivation and organizational commitment respectively. It was hypothesized that organizational climate (human relation model and open system model) would be positively associated with work motivation and organizational commitment. Both Pearson product moment correlation coefficient and multiple regression analysis were used to analyze the data. The results of correlation revealed that there is a positive relationship between organizational climate (human relation model and open system model) and work motivation & organizational commitment. Multiple regression also proved that organizational climate (human relation model and open system model) plays an important role in work motivation and organizational commitment. Implications of the findings have been discussed. Key words: Organizational climate, work motivation, organizational commitment, employees
    Date: 2015–12
  5. By: Emiliano Mandrone; Manuel Marocco; Debora Radicchia
    Abstract: This article studies contractual flexibility, disguised employment and precarious work and gives an interpretation of these issues both through a legal and economic approach. It is necessary to clarify that as flexible workers we consider the following groups of individuals: 1) workers with temporary contracts, 2) independent self-employed who are comparable to subordinate employees 3)involuntary part-timers workers. Moreover, it is crucial to analyse these phenomena in a longitudinal framework to assess whether flexibility determines precariousness; in fact we define "precarious" as those who remain flexible worker after a period of 12 months (or other benchmark) and the flexible worker who loses their job within a period of 12 months. We asses that contractual flexibility and precarious work experienced in the last twenty years have reduced quality of work and labour productivity, causing a reduction in performance in Italy.
  6. By: Andreas Fagereng (Statistics Norway); Luigi Guiso (EIEF); Luigi Pistaferri (Stanford University and NBER)
    Abstract: Estimating the effect of background risk on individual …financial choices faces two challenges. First, the identi…cation of the marginal effect requires a measure of at least one component of human capital risk that quali…fies as "background" (a risk that an individual cannot diversify or avoid). Absent this, estimates suffer from measurement error and omitted variable bias. Moreover, measures of background risk must vary over time to eliminate unobserved heterogeneity. Second, once the marginal effect is identifi…ed, an evaluation of the economic signi…cance of background risk requires knowledge of the size of all the background risk actually faced. Existing estimates are problematic because measures of background risk fail to satisfy the "non- avoidability" requirement. This creates a downward bias which is at the root of the small estimated effect of background risk. To tackle the identi…cation problem we match panel data of workers and fi…rms and use the variability in the profi…tability of the fi…rm that is passed over to workers to obtain a measure of risk that is hardly avoidable. We rely on this measure to instrument total variability in individual earnings and fi…nd that the marginal effect of background risk is much larger than estimates that ignore endogeneity. We bound the economic impact of human capital background risk and fi…nd that its overall effect is contained, not because its marginal effect is small but because its size is small. And size of background risk is small because fi…rms provide substantial wage insurance.
    Date: 2016
  7. By: Ivan G. Lopez Cruz (Indiana University)
    Abstract: A substantial body of empirical and policy literature argues that schooling can be a powerful tool against criminality and violence. On the other hand, recent work has demonstrated that low levels of public safety can have serious detrimental effects on educational outcomes. This paper develops a model to analyze the roles that investments in education and in public safety have for students educational attainment. The model captures the main stylized facts of the literature and explores the optimal balance between investment in policing and schooling. The model analyses individual decisions to accumulate violence related skills ("street capital") at the expense of human capital information in a setting where property rights require private efforts to be enforced. The model assumes that inhabitants of a region decide, during childhood, to allocate efforts to schooling and/or learning "street skills" that, as adults, will serve them in resolving violent conflicts in their favor. Hence, if the level of public safety, which is the only mean to prevent violent confrontations, is low, the incentives to study will also be lower. Moreover, one of the results establishes that those agents who accumulate more human capital, and hence are more productive, suffer a comparative disadvantage in exerting violence because their opportunity cost of doing so is higher. Therefore, if investments in public education increase the productivity spread between adult agents, the incentives to study might decrease and lead to a lower output, showing that the benefits of schooling can only be seized if they are complemented with enough public safety.
    Keywords: Street Capital, Human Capital, Public Education, Policing, Property Rights
    Date: 2015–12
  8. By: Sebastiano Fadda (dpt. Economia)
  9. By: Jaewon Jung
    Abstract: In this paper, we develop a simple general-equilibrium trade model in which heterogeneous workers make an investment decision in acquiring advanced managerial skills and choose their optimal effort level based on their own individual organizational beliefs and CEO’s managerial vision. In doing so, we show how trade liberalization and/or changes in managerial vision of CEO may lead to non-monotonic income changes within firms due to the interaction between workers’ beliefs and CEO’s managerial vision. Whether a stronger (or weaker) CEO’s managerial vision benefits the firm or not depends on its extent relative to workers’ overall beliefs, and may involve some winners and losers within firms.
    Keywords: Organizational belief, Managerial vision, Organizational change, International trade
    JEL: F16
    Date: 2015–12

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