nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒03‒29
nine papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. Human resource management practices and organizational performance. The mediator role of immaterial satisfaction in Italian Social Cooperatives By Silvia Sacchetti; Ermanno C. Tortia; Francisco J. López Arceiz
  2. Overconfidence and Occupational Choice By Edward P. Lazear
  3. Incentive Design in Education: An Empirical Analysis By Hugh Macartney; Robert McMillan; Uros Petronijevic
  4. The Gender Wage Gap: Extent, Trends, and Explanations By Francine D. Blau; Lawrence M. Kahn
  5. Business Practices in Small Firms in Developing Countries By McKenzie, David; Woodruff, Christopher
  6. Human Capital Investment, Inequality and Economic Growth By Kevin M. Murphy; Robert H. Topel
  7. Preference for the workplace, investment in human capital, and gender By Wiswall, Matthew; Zafar, Basit
  8. Not Working at Work: Loafing, Unemployment and Labor Productivity By Michael Burda; Katie R. Genadek; Daniel S. Hamermesh
  9. Growth through Rigidity: An Explanation for the Rise in CEO Pay By Kelly Shue; Richard Townsend

  1. By: Silvia Sacchetti (University of Stirling); Ermanno C. Tortia (University of Trento); Francisco J. López Arceiz (Faculty of Economics and Business Studies, Universidad de Zaragoza)
    Abstract: The paper deals with the mediating role of immaterial satisfaction between substantive human resources (HR) features and organizational performance. We address this relationship in the Italian social service sector using a survey dataset that includes 4134 workers and 320 not-for-profit social cooperatives. The obtained results show that human resource management (HRM) practices influence immaterial satisfaction and, satisfaction positively impacts on firm performance. However, the impact of the different HRM practices is not the same. In this sense, worker involvement and workload pressure have a positive impact on firm performance; but task autonomy or collaborative teamwork do not have impact on organizational performance.
    Keywords: Immaterial satisfaction; workload pressure; autonomy; involvement; teamwork; firm performance.
    JEL: J28 J81 L15 L25 L84 M54
    Date: 2016–02
  2. By: Edward P. Lazear
    Abstract: A statistical theory of overconfidence is proposed and applied to the issue of occupational choice. Individuals who can choose whether to engage in an activity or not must estimate their performance. The estimates have error and that error has positive expectation among those who engage in the activity. As a result, an unbiased ex ante estimate of performance in an occupatoin results in an ex post biased estimate of ability among those enter. The statistical theory of overconfidence provides a number of testable implications, most significant of which is that overconfidence should be more prevalent in occupations where estimates of ability are noisier. This and other implications are tested and found to hold using the Current Population Survey and Panel Study of Income Dynamics data.
    JEL: D02 J0 M5 M50 M51
    Date: 2016–01
  3. By: Hugh Macartney; Robert McMillan; Uros Petronijevic
    Abstract: While incentive schemes to elicit greater effort in organizations are widespread, the incentive strength-effort mapping is difficult to ascertain in practice, hindering incentive design. We propose a new semi-parametric method for uncovering this relationship in an education context, using exogenous incentive variation and rich administrative data. The estimated effort response forms the basis of a counterfactual approach tracing the effects of various accountability systems on the full distribution of scores. We show higher average performance comes with greater score dispersion for a given accountability scheme, and that incentive designs not yet enacted can improve performance further, relevant to education reform.
    JEL: D82 I21 J33 M52
    Date: 2015–12
  4. By: Francine D. Blau; Lawrence M. Kahn
    Abstract: Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to identify what has been learned about the explanations for the gap. We conclude that many of the traditional explanations continue to have salience. Although human capital factors are now relatively unimportant in the aggregate, women’s work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials. Gender differences in occupations and industries, as well as differences in gender roles and the gender division of labor remain important, and research based on experimental evidence strongly suggests that discrimination cannot be discounted. Psychological attributes or noncognitive skills comprise one of the newer explanations for gender differences in outcomes. Our effort to assess the quantitative evidence on the importance of these factors suggests that they account for a small to moderate portion of the gender pay gap, considerably smaller than say occupation and industry effects, though they appear to modestly contribute to these differences.
    JEL: J16 J24 J31 J71
    Date: 2016–01
  5. By: McKenzie, David (World Bank); Woodruff, Christopher (University of Warwick)
    Abstract: Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? We develop 26 questions that measure business practices in marketing, stock-keeping, record-keeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria and Sri Lanka. We show that variation in business practices explains as much of the variation in outcomes – sales, profits and labor productivity and TFP – in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The association of business practices with firm outcomes is robust to including numerous measures of the owner’s human capital. We find that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices.
    Keywords: business practices; small enterprises; productivity; management JEL Classification: O12; L26; M20; O17; M53.
    Date: 2016
  6. By: Kevin M. Murphy; Robert H. Topel
    Abstract: We treat rising inequality is an equilibrium outcome in which human capital investment fails to keep pace with rising demand for skills. Investment affects skill supply and prices on three margins: the type of human capital in which to invest; how much to acquire; and the intensity of use. The latter two represent the intensive margins of human capital acquisition and utilization. These choices are substitutes for the creation of new skilled workers, yet they are complementary with each other, magnifying inequality. When skill-biased technical change drives economic growth, greater inequality reduces growth.
    JEL: D2 D24 D31 D33 J24 J31
    Date: 2016–01
  7. By: Wiswall, Matthew (Arizona State University); Zafar, Basit (Federal Reserve Bank of New York)
    Abstract: In this paper, we use a hypothetical choice methodology to robustly estimate preferences for workplace attributes. Undergraduate students are presented with sets of jobs that vary in their attributes (such as earnings and job hours flexibility) and asked to state their probabilistic choices. We show that this method robustly identifies preferences for various job attributes, free from omitted variable bias and free from considering the equilibrium matching of workers to jobs. While there is substantial heterogeneity in preferences, we find that women, on average, have a higher willingness to pay for jobs with greater work flexibility (lower hours, and part-time option availability) and job stability (lower risk of job loss), while men have a higher willingness to pay for jobs with higher earnings growth. In the second part of the paper, using data on students’ perceptions about the types of jobs that would be offered to them conditional on their college major choices, we relate these job attribute preferences to major choice. We find that students perceive jobs offered to humanities majors to have fewer hours, more worktime flexibility, and higher stability than jobs offered to economics/business majors. These job attributes are found to play a role in major choice, with women exhibiting greater sensitivity to nonpecuniary job attributes in major choice.
    Keywords: workplace preferences; compensating differentials; human capital; college majors; gender
    JEL: J16 J24
    Date: 2016–03–01
  8. By: Michael Burda; Katie R. Genadek; Daniel S. Hamermesh
    Abstract: We use the American Time Use Survey (ATUS) 2003-12 to estimate time spent by workers in non-work while on the job. Non-work time is substantial and varies positively with the local unemployment rate. While average time spent by workers in non-work conditional on any positive amount rises with the unemployment rate, the fraction of workers reporting positive values varies pro-cyclically, declining in recessions. These results are consistent with a model in which heterogeneous workers are paid efficiency wages to refrain from loafing on the job. That model correctly predicts relationships of the incidence and conditional amounts of non-work with wage rates and measures of unemployment benefits in state data linked to the ATUS, and it is consistent with estimated occupational differences.
    JEL: E24 J23
    Date: 2016–01
  9. By: Kelly Shue; Richard Townsend
    Abstract: The dramatic rise in CEO compensation during the 1990s and early 2000s is a longstanding puzzle. In this paper, we show that much of the rise can be explained by a tendency of firms to grant the same number of options each year. Number-rigidity implies that the grant-date value of option awards will grow with firm equity returns, which were very high on average during the tech boom. Further, other forms of CEO compensation did not adjust to offset the dramatic growth in the value of option pay. Number-rigidity in options can also explain the increased dispersion in pay, the difference in growth between the US and other countries, and the increased correlation between pay and firm-specific equity returns. We present evidence that number-rigidity arose from a lack of sophistication about option valuation that is akin to money illusion. We show that regulatory changes requiring transparent expensing of the grant-date value of options led to a decline in number-rigidity and helps explain why executive pay increased less with equity returns during the housing boom in the mid-2000s.
    JEL: D03 G3 J3 K2 M52
    Date: 2016–02

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