nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒03‒23
thirteen papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. Management Practices, Workforce Selection and Productivity By Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter
  2. Estimating Social Preferences and Gift Exchange at Work By Stefano DellaVigna; John A. List; Ulrike Malmendier; Gautam Rao
  3. Signaling cooperation By Heinz, Matthias; Schumacher, Heiner
  4. Learning Job Skills from Colleagues at Work: Evidence from a Field Experiment Using Teacher Performance Data By John P. Papay; Eric S. Taylor; John H. Tyler; Mary Laski
  5. Life-Cycle Human Capital Accumulation Across Countries: Lessons From U.S. Immigrants By David Lagakos; Benjamin Moll; Tommaso Porzio; Nancy Qian; Todd Schoellman
  6. Does say on pay matter? Evidence from the German natural experiment By Troeger, Tobias H.; Walz, Uwe
  7. MisMatch in Human Capital Accumulation By Russell Cooper; Huacong Liu
  8. Bonus caps, deferrals and bankers' risk-taking By Jokivuolle, Esa; Keppo, Jussi; Yuan, Xuchuan
  9. Attenuation bias when measuring inventive performance By Zwick, Thomas; Frosch, Katharina
  10. Going into Business and Out of Business: The Role of Human Capital By Arnab Bhattacharjee; Jean Bonnet; Nicolas Le Pape; Régis Renault
  11. Incentives and evaluation of public managers in Italy By Roberta Occhilupo; Lucia Rizzica
  12. Employee Representation Legislations and Innovation By Belloc, Filippo
  13. The old boy network: The impact of professional networks on remuneration in top executive jobs By Lalanne, Marie; Seabright, Paul

  1. By: Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter
    Abstract: Recent research suggests that much of the cross-firm variation in measured productivity is due to differences in use of advanced management practices. Many of these practices - including monitoring, goal setting, and the use of incentives - are mediated through employee decision-making and effort. To the extent that these practices are complementary with workers' skills, better-managed firms will tend to recruit higher-ability workers and adopt pay practices to retain these employees. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with longitudinal earnings records for their employees to study the relationship between productivity, management, worker ability, and pay. As documented by Bloom and Van Reenen (2007) there is a strong partial correlation between management practice scores and firm-level productivity in Germany. In our preferred TFP estimates only a small fraction of this correlation is explained by the higher human capital of the average employee at better-managed firms. A larger share (about 13%) is attributable to the human capital of the highest-paid workers, a group we interpret as representing the managers of the firm. And a similar amount is mediated through the pay premiums offered by better-managed firms. Looking at employee inflows and outflows, we confirm that better-managed firms systematically recruit and retain workers with higher average human capital. Overall, we conclude that workforce selection and positive pay premiums explain just under 30% of the measured impact of management practices on productivity in German manufacturing.
    Keywords: management practices, productivity, wages
    JEL: L2 M2 O32 O33
    Date: 2016–03
  2. By: Stefano DellaVigna; John A. List; Ulrike Malmendier; Gautam Rao
    Abstract: We design a model-based field experiment to estimate the nature and magnitude of workers’ social preferences towards their employers. We hire 446 workers for a one-time task. Within worker, we vary (i) piece rates; (ii) whether the work has payoffs only for the worker, or also for the employer; and (iii) the return to the employer. We then introduce a surprise increase or decrease in pay (‘gifts’) from the employer. We find that workers have substantial baseline social preferences towards their employers, even in the absence of repeated-game incentives. Consistent with models of warm glow or social norms, but not of pure altruism, workers exert substantially more effort when their work is consequential to their employer, but are insensitive to the precise return to the employer. Turning to reciprocity, we find little evidence of a response to unexpected positive (or negative) gifts from the employer. Our structural estimates of the social preferences suggest that, if anything, positive reciprocity in response to monetary ‘gifts’ may be larger than negative reciprocity. We revisit the results of previous field experiments on gift exchange using our model and derive a one-parameter expression for the implied reciprocity in these experiments.
    JEL: C93 D64
    Date: 2016–02
  3. By: Heinz, Matthias; Schumacher, Heiner
    Abstract: We examine what an applicant´s vita signals to potential employers about her willingness to cooperate in teams. Intensive social engagement may credibly reveal that an applicant cares about the well-being of others and therefore is less likely to free-ride in teamwork situations. We find that contributions in a public goods game strongly increase in a subject´s degree of social engagement as indicated on her résumé (and rated by an independent third party). Engagement in other domains, such as student or sports associations, is not positively correlated with contributions. In a prediction experiment with human resource managers from various industries, we find that managers use résumé content effectively to predict relative differences in subjects´ willingness to cooperate. Thus, young professionals signal important behavioral characteristics to potential employers through the choice of their extracurricular activities.
    Keywords: signaling,public goods,labor markets,extracurricular activities
    JEL: C72 C92 D82
    Date: 2015
  4. By: John P. Papay; Eric S. Taylor; John H. Tyler; Mary Laski
    Abstract: We study on-the-job learning among classroom teachers, especially learning skills from coworkers. Using data from a new field experiment, we document meaningful improvements in teacher job performance when high- and low-performing teachers working at the same school are paired and asked to work together on improving the low-performer’s skills. In particular, pairs are asked to focus on specific skills identified in the low-performer’s prior performance evaluations. In the classrooms of low-performing teachers treated by the intervention, students scored 0.12 standard deviations higher than students in control classrooms. These improvements in teacher performance persisted, and perhaps grew, in the year after treatment. Empirical tests suggest the improvements are likely the result of low-performing teachers learning skills from their partner.
    JEL: I2 J24 M53
    Date: 2016–02
  5. By: David Lagakos; Benjamin Moll; Tommaso Porzio; Nancy Qian; Todd Schoellman
    Abstract: How much does life-cycle human capital accumulation vary across countries? This paper seeks to answer this question by studying U.S. immigrants, who come from a wide variety of countries but work in a common labor market. We document that returns to potential experience among U.S. immigrants are higher on average for workers coming from rich countries than for those coming from poor countries. To understand this fact we build a model of life-cycle human capital accumulation that features three potential theories, working respectively through cross-country differences in: selection, skill loss, and human capital accumulation. To distinguish between theories, we use new data on the characteristics of immigrants and non-migrants from a large set of countries. We conclude that the most likely theory is that immigrants from poor countries accumulate relatively less human capital in their birth countries before migrating. Our findings imply that life cycle human capital stocks are on average much larger in rich countries than poor countries.
    JEL: E24 J61 O11 O15
    Date: 2016–01
  6. By: Troeger, Tobias H.; Walz, Uwe
    Abstract: This paper investigates the potential implications of say on pay on management remuneration in Germany. We try to shed light on some key aspects by presenting quantitative data that allows us to gauge the pertinent effects of the German natural experiment that originates with the 2009 amendments to the Stock Corporation Act of 1965. In order to do this, we deploy a hand-collected data set for Germany's major firms (i.e. DAX 30), for the years 2006-2012. Rather than focusing exclusively on CEO remuneration we collected data for all members of the management board for the whole period under investigation. We observe that the compensation packages of management board members of Germany's DAX30-firms are quite closely linked to key performance measures. In addition, we find that salaries increase with the size of the company and that ownership concentration has no significant effect on compensation. Also, our findings suggest that the two-tier system seems to matter a lot when it comes to compensation. However, it would be misleading to state that we see no significant impact of the introduction of the German say on pay-regime. Our findings suggest that supervisory boards anticipate shareholder-behavior.
    Keywords: say-on-pay,corporate governance,management compensation
    JEL: K20 K22 L22
    Date: 2016
  7. By: Russell Cooper; Huacong Liu
    Abstract: This paper studies the allocation of heterogeneous agents to levels of educational attainment. The goal is to understand the magnitudes and sources of mismatch in this assignment, both in theory and in the data. The paper presents evidence of substantial mismatch between ability and educational attainment across 21 OECD countries, with a focus on Germany, Italy, Japan and the US. In the model, mismatch originates from: (i) taste shocks, (ii) binding borrowing constraints and (iii) noisy measures of ability in test scores. The model is estimated using a simulated method of moments approach. The main finding is that measured mismatch arises largely from noise in test scores and does not reflect borrowing constraints. Differences in tastes for education across households play a minor role in explaining mismatch. Further, the estimation allows us to decompose the college wage premium, isolating cross-country differences in selection effects from the return to education.
    JEL: E24 J24 O43
    Date: 2016–02
  8. By: Jokivuolle, Esa; Keppo, Jussi; Yuan, Xuchuan
    Abstract: Regulators restrict bankers' risk-taking incentives by using a bonus cap or by extending the effective bonus accrual period. However, considering the costs of changing the bank's risk position, our model shows that extended bonus accrual periods alone do not lead to lower risk-taking. In contrast, a sufficiently tight bonus cap reduces risk-taking even when the costs of changing the bank's risk position are considered. The calibrated model indicates that a bonus cap that equals a fixed salary (as in the EU) reduces risk on average by 2%-10%, while extending bonus accrual periods is impotent.
    Keywords: banking, bonuses, regulation, compensation, Dodd?Frank Act
    JEL: G01 G21 G28 J33 M52
    Date: 2016–02–23
  9. By: Zwick, Thomas; Frosch, Katharina
    Abstract: Most previous results on determinants of inventive performance are biased because inventive performance is measured with error. This measurement error causes attenuation bias. More specifically, for example age and education as drivers of patenting success have biased coefficients and too high standard errors when inventive performance is measured in short observation periods. The reason for measurement errors in inventive performance is that patents are typically applied for in waves.
    Keywords: Measurement error,inventive performance,observation period
    JEL: C33 C52 O31
    Date: 2016
  10. By: Arnab Bhattacharjee (Heriot-Watt University, Edinburgh,UK); Jean Bonnet (Normandie Université, UNICAEN, CREM, France); Nicolas Le Pape (Normandie Université, UNICAEN, CREM, France); Régis Renault (Université de Cergy-Pontoise, THEMA)
    Abstract: An evaluation of the impact of an entrepreneur's human capital on her/his entrepre-neurial ability is likely to suffer from a sample selection bias if performed on a sample of new entrepreneurs alone. Our theoretical model of entrepreneurial choice allows us to characterize this bias. It is shown to be positive (respectively negative) for individuals who were in a favorable (respectively adverse) situation in the labor market at the time at which they decided to become self-employed. Our empirical application measures the impact of the entrepreneur's education on the newly created firm's survival. It is found to be strong and significant for individuals who were previously employed in the new firm's branch of activity, whereas it is at best weakly significant for individuals who were previously unemployed or employed in a branch di¤erent from that of the new firm, so that they are more likely to have been poorly matched. These results suggest a very substantial sample selection bias in our sample.
    Keywords: entrepreneurial ability, labor market, human capital, rm survival
    JEL: L26 C41 J24
    Date: 2016–03
  11. By: Roberta Occhilupo (Bank of Italy); Lucia Rizzica (Bank of Italy)
    Abstract: We analyse the current structure and the most recent evolution of the legislation concerning incentives for public managers in Italy. In the light of the main findings of economic theory, we identify the most critical issues inherent to the design of an optimal system of incentives. These are the existence of multi-principle agency problems involving public managers; the difficulty of observing and measuring the output produced in the public sector; the excessive limits to managers’ autonomy imposed by the need to respect the rule of law. Along these three lines, we analyse the reforms of public management that have been adopted in Italy from the nineties and evaluate their effectiveness through an empirical analysis of the premiums paid to public managers in 2012. The empirical analysis reveals a substantial flattening of the premiums paid and highlights that only the age of the manager significantly affects how much they receive. We conclude that the poor effectiveness of the current system of incentives for public managers is mainly due to the undifferentiated application of the same rules to all organizations, to an inadequate planning of the objectives and to the excessive limits to managers’ autonomy.
    Keywords: public sector labour markets, management, incentives
    JEL: D02 D73 J58 K31
    Date: 2016–02
  12. By: Belloc, Filippo
    Abstract: We analyse how countries' innovation outcomes are affected by national legislations of worker participation to corporate governance. We develop a model of employee representation laws (ERL) and innovation in the presence of incomplete labour contracts and predict heterogeneous ERL effects across different systems of dismissal regulation. We then perform a panel regression analysis, exploiting 2-digit panel data for 21 manufacturing sectors of USA, UK, India, France and Germany, over the 1977-2005 period. We find that ERL effects on aggregate innovation output are positive, statistically significant and higher in magnitude where national labour laws impose significant firing costs to the firm with respect to institutional settings in which firing costs are low or absent. These results are robust to possible technology selection dynamics, endogeneity and institutional changes in the legal system of patent protection. We also estimate ERL effects on innovation conditional on firing costs at an industry level and show that the impact of ERL is relatively larger in those sectors where the human capital contribution to production is higher. Our results have relevant implications for the optimal design of employee representation legislations.
    Keywords: Employee Representation Law, Innovation, Panel data, Resource /Energy Economics and Policy, K31, O31, P51,
    Date: 2016–02–01
  13. By: Lalanne, Marie; Seabright, Paul
    Abstract: We investigate the impact of social networks on earnings using a dataset of over 20,000 senior executives of European and US firms. The size of an individual's network of influential former colleagues has a large positive association with current remuneration. An individual at the 75th percentile in the distribution of connections could expect to have a salary nearly 20 per cent higher than an otherwise identical individual at the median. We use a placebo technique to show that our estimates reflect the causal impact of connections and not merely unobserved individual characteristics. Networks are more weakly associated with women's remuneration than with men's. This mainly reflects an interaction between unobserved individual characteristics and firm recruitment policies. The kinds of firm that best identify and advance talented women are less likely to give them access to influential networks than are firms that do the same for the most talented men.
    Keywords: professional networks,gender wage gap,executive compensation,placebo technique
    JEL: A14 J16 J31 J33
    Date: 2016

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