nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒02‒23
twelve papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. Share Capitalism and Worker Wellbeing By Alex Bryson
  2. Who fared better? The fortunes of performance-pay and fixed-pay workers through recession By Martin Weale; Alex Bryson; John Forth; Lucy Stokes
  3. Endogenous contractual externalities By Emre Ozdenoren; Kathy Yuan
  4. The propensity to employ high skilled employees. An empirical analysis on Manager and Intellectual Professions By Lucia Aiello; Giuseppe Espa; Mauro Gatti; Andrea Mazzitelli
  5. Ownership and Pay in Britain By Alex Bryson
  6. Internal Migration and Human Capital Theory: To What Extent Is It Selective By Korpi, Martin; Clark, William
  7. Updated Expectations and College Application Portfolios By Bond, Timothy N.; Bulman, George; Li, Xiaoxiao; Smith, Jonathan
  8. Incentivizing Quantity and Quality of Output: An Experimental Investigation of the Quantity-Quality Trade-off By Rubin, Jared; Samek, Anya; Sheremeta, Roman
  9. Wages and human capital in finance: international evidence, 1970-2005 By Boustanifar, Hamid; Grant, Everett; Reshef, Ariell
  10. A Weibull Analysis of the Current Job Tenure in Taiwan with both Accelerated Failure-Time and Proportional Hazards Matrics By Feng-fuh Jiang
  11. Examining the Mediating and Moderating Effects of Engagement and Conscientiousness for the Job Characteristics and Intention to Quit Relationship By Agarwal, Upasna A.; Gupta, Vishal
  12. Intuitive cooperation in The Hague : A natural field experiment By Artavia Mora, L.D.

  1. By: Alex Bryson
    Abstract: We show that worker wellbeing is not only related to the amount of compensation workers receive but also how they receive it. While previous theoretical and empirical work has often been pre-occupied with individual performance-related pay, we here demonstrate a robust positive link between the receipt of a range of group performance schemes (profit shares, group bonuses and share ownership) and job satisfaction. Critically, this relationship remains after conditioning on wage levels, which suggests these pay methods provide utility to workers in addition to that through higher wages. These findings survive a variety of methods aimed at accounting for unobserved individual and job-specific characteristics. We investigate two potential channels for this effect. We first demonstrate that half of the positive effect can be accounted for by employees’ tendency to reciprocate in return for the “gift” of share capitalism. Second, we show that these ‘share capitalist’ modes of pay dampen the negative wellbeing effects of what we typically think of as “bad” aspects of job quality. Finally, share-capitalist pay methods also have positive wellbeing spill-over effects on co-workers.
    Date: 2014–12
  2. By: Martin Weale; Alex Bryson; John Forth; Lucy Stokes
    Abstract: We examine whether those paid for performance fared better in terms of wage growth and job tenure than their fixed pay counterparts through the most recent recession. In theory we might anticipate that, since performance pay workers share the income risks of economic shocks with their employers, their earnings may have declined more than those of fixed pay employees. However, for this very reason, they may experience more stable employment patterns than fixed pay workers whose ‘stickier’ wages may make them susceptible to job loss. Using data from the Annual Survey of Hours and Earnings 2002-2012, we find changes in bonus payments accounted for 16 per cent of the decline in aggregate wages between 2009 and 2012. Bonus payments fell more precipitately than fixed wages of both performance pay and fixed pay workers. We confirm that performance pay employees were more likely to experience nominal wage cuts than fixed pay employees during the recession. This ‘wage gap’ was apparent for hourly wages and was not driven by differential hours flexibility. We also find performance pay employees had longer job tenure than fixed pay employees.
    Date: 2014–11
  3. By: Emre Ozdenoren; Kathy Yuan
    Abstract: We study effort and risk-taking behaviour in an economy with a continuum of principal-agent pairs where each agent exerts costly hidden effort. When the industry productivity is uncertain, agents have motivations to match the industry average effort, which results in contractual externalities. Contractual externalities have welfare changing effects when the information friction is correlated and the industry risk is not revealed. This is because principals do not internalise the impact of their choice on other principals' endogenous industry risk exposure. Relative to the second best, if the expected productivity is high, risk-averse principals over-incentivise their own agents, triggering a rat race in effort exertion, resulting in over-investment in effort and excessive exposure to industry risks relative to the second best. The opposite occurs when the expected productivity is low.
    Keywords: Contractual externalities; relative and absolute performance contracts; boom-bust effort exertion and risk taking.
    JEL: D86 G30
    Date: 2015–09
  4. By: Lucia Aiello; Giuseppe Espa; Mauro Gatti; Andrea Mazzitelli
    Abstract: The paper is focused on a particular dimension of performance of work organization: the high skills (h-skills) of workers required by enterprises. This choice depends on the interaction between different variables; in particular, the need of the enterprise to obtain an economic equilibrium that can be sustainable over time. Thus, this work aims to consider the role of skills and competences of workers into the hiring propensity of enterprises. The mission of this research is to verify the main characteristics, which affect the choice of employing of high skilled employees, in pre-crisis time. In order to not correlate required skills and financial-economic crisis after 2008, the work refers to the pre-crisis period (2003-2007). The territory that we have considered is Rome and its province. The managerial implication is to put in evidence the importance of stimulating and supporting the hiring policies of workers with high skills and considering their impact on educational policies. This evidence can create the main conditions to increase the quality of supply of the labor market and subsequently, the satisfaction of demand of the labor market, namely the enterprise also. The suggestions consider the labor market and its actors; in this perspective the mains actors are the enterprises, since this study shows that the quality of workers is a higher priority for them compared to the other conditions. In addition, companies that follow this approach are those that export and operate in international markets and this may be an incentive to other companies. This study verifies what the previously cited quality conditions are. Finally, one of the managerial implications is new evidence: for enterprise and its survival the policy makers may have to be directed towards ensuring the right balance between supply and demand and not the contractual typology only. From the organizational perspective, the enterprise should reflect on this aspect: the lever of the contract is not really significant, as we can see from this study, to stimulate the qualitative aspects of labor demand, namely the commitment and organizational health. The analysis is based on the Excelsior's data-base Information System, which collects data on the recruitment propensity of enterprises, propensity that is confirmed in more than 80% of cases into recall of the next year; the methodological approach was the logistic regression model, which was fitted to managers and intellectual professions. The original contribution is that quantitative analysis explains what the skills and competences of workers are and what the needs to succeed today in the workplace are. This may stimulate the organizational behavior and well-being of the worker, as well as the society. In a rapidly changing world, graduates have to strengthen their cvs in order to cultivate increasingly higher skills and to convince of their abilities. Companies were already looking for talents in pre-crisis times.
    Keywords: Employability, propensity to employ, well-being, high skills, Excelsior Information System, logistic model, Cook’s influence statistic, ROC Curve.
    Date: 2015
  5. By: Alex Bryson
    Abstract: Drawing on principal-agent perspectives on corporate governance, this paper examines whether employees’ hourly pay is linked to ownership dispersion. Using linked workplace-worker data from the British Workplace Employment Relations Survey (WERS) 2011, we find average hourly pay is higher in dispersed ownership workplaces. The raw gap of 30 log points falls to 8 log points when we control for differences in worker and workplace characteristics. The premium is constant across most of the wage distribution, but falls a little at the 90th percentile to become statistically non-significant. This contrasts with earlier papers which indicate that higher level employees are the primary beneficiaries of higher pay from dispersed ownership.
    Date: 2015–07
  6. By: Korpi, Martin (The Ratio institute); Clark, William (UCLA)
    Abstract: Empirical studies of international labor migration, modelling average outcomes, suggest migrants move to enhance returns to their labor. In contrast, major international surveys show less than a third of internal migrants as motivated by employment reasons. Using Swedish panel data for the years 2001-2009, this paper addresses this disconnect by examining the full distribution of migrant income changes. Results from initial CEM matching and quantile regression suggest that large returns to internal migration are mostly captured by the higher educated. Much if not most of migration outcomes are however a wash and indeed often negative in terms of pay – off. This suggests models of average outcomes as insufficient in addressing human capital motivated migration.
    Keywords: migration; human capital; labor mobility; urban rural
    JEL: J24 J31 J61 R12
    Date: 2014–12–31
  7. By: Bond, Timothy N.; Bulman, George; Li, Xiaoxiao; Smith, Jonathan
    Abstract: Economists have a limited understanding of how sensitive human capital investment is to information about aptitude or likelihood of success. We shed light on this by estimating if students update their college choices in response to large positive and negative information shocks generated by the release of SAT scores. Using new data on when students select colleges to receive their scores, we find that positive shocks cause students to choose more selective colleges that charge higher tuition and have higher graduation rates. Updating is significant for students from high and low income households and for minority and non-minority students.
    Keywords: college choice; learning; SAT
    JEL: D83 I20 J24
    Date: 2016–02–02
  8. By: Rubin, Jared; Samek, Anya; Sheremeta, Roman
    Abstract: Firms face an optimization problem that requires a maximal quantity output given a quality constraint. How firms should incentivize quantity and quality to meet these dual goals remains an open question, potentially due to limitations of field data. We provide a theoretical model and conduct an experiment in which participants are paid for both quantity and quality of a real effort task. Consistent with the theoretical predictions, higher quality incentives encourage participants to shift their attention from quantity to quality, and higher quality incentives reduce inefficient decision-making. We also observe behavioral components in responsiveness to the quality incentive.
    Keywords: quantity, quality, experiment, incentives, real effort, loss aversion
    JEL: D24 J24 J31 J41
    Date: 2016–01–27
  9. By: Boustanifar, Hamid (BI Norwegian Business School); Grant, Everett (Federal Reserve Bank of Dallas); Reshef, Ariell (Paris 1 Sorbonne-Pantheon, CNRS and Paris School of Economics)
    Abstract: We study the allocation and compensation of human capital in the finance industry in a set of developed economies in 1970-2005. Finance relative skill intensity and skilled wages generally increase but not in all countries, and to varying degrees. Skilled wages in finance account for 36% of increases in overall skill premia, although finance only accounts for 5.4% of skilled private sector employment, on average. Financial deregulation, financial globalization and bank concentration are the most important factors driving wages in finance. Differential investment in information and communication technology does not have causal explanatory power. High finance wages attract skilled international immigration to finance, raising concerns for "brain drain".
    JEL: G2 J2 J3
    Date: 2016–02–01
  10. By: Feng-fuh Jiang (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: Relations of current job tenure, which refers to the length of time in the current role at a specific firm, with firm-specific human capital and their determinants are examined theoretically. The approach of estimation for the survival model is explored by associating Weibulls parametric log-linear duration model with the accelerated life model, as well as both proportional and relative hazards as embedded in Cox's proportional hazards model. By fitting the survivalmodel to household data from the May 2012 Manpower Utilization Survey of Taiwan, the estimation results can be briefly summarized as follows: (1) The duration of the current job tenure appears to be positively associated with formal schooling and general experience levels, government and large-sized firms, typical employment, full-time job, married with spouse present,and the prime agers of 29-44, and hence negatively related to the situations that it otherwise would be, i.e., medium- or small-sized firm, atypical employment, part-time job, single or no spouse status, and the mid and elderly agers of 45-64. (2) The current job tenure of the reference subject fails around 8 times as earlier (or ages around 8 times as fast) as that of the subject with covariates. More interestingly, this implies that the risk that the current job tenure of the subject fails is exposed at a given survival time to only around an eighth times the risk that the current job tenure of the reference subject fails at about an eighth time as earlie as the survival time. (3)Of all the covariates, formal schooling level imposes the greatest positive effect on the time length of current job tenure and hence have the greatest mitigating effect on the risk of current job tenure; conversely, atypical employment imposes the largest negative effect on the time length of current job tenure and hence have the largest increasing effect on the risk of current job tenure. (4) Estimation results from Weibull do have implications similar to correspondingly respective results from both the accelerated failure-time and proportional hazards metrics. JEL Classification: J24, J53, J63
    Keywords: Current Job Tenure, Weibull Duration Analysis, Accelerated Failure-Time Model, Proportional Hazards, Relative Hazards
    Date: 2016–02
  11. By: Agarwal, Upasna A.; Gupta, Vishal
    Abstract: Building on the job demands-resources, social exchange, and conservation of resources theories, the present study tests the relationship between job characteristics and intention to quit via work engagement as a mediator, and conscientiousness as a moderator. Based on data collected from a sample of Indian managers (N = 1302), we found that work engagement mediated the relationship between job characteristics and intention to quit. Moreover, personality trait of conscientiousness qualified job characteristics-intention to quit and work engagement-intention to quit relationships such that the negative effects of JC and work engagement on intention to quit were stronger for high conscientiousness than low. Implications for theory and practice are discussed.
  12. By: Artavia Mora, L.D.
    Abstract: Cooperation is at the centre of human nature and at the heart of social transformations. Grasping how strangers cooperate and behave with each other may permit a better understanding of the way societies function and can develop as they modernize. To advance this comprehension, this study examines whether humans are naturally predisposed towards cooperation or selfishness, and how their behavior changes when people have more time to think. To answer these questions, the study implements an original natural field experiment which exogenously varies response times (through average human walking time) to analyze the intuitive and rational underpinnings of human behavior. The experimental findings suggest that while humans are naturally inclined to help each other, they start behaving more selfishly as thinking time increases. There is also clear evidence that humans are prone to withhold help when strangers violate social norms and the likelihood of such indirect punishment increases when they have more time to think.
    Keywords: cooperation, natural field experiment, dual-reasoning, The Hague
    Date: 2016–01–29

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