nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒04‒04
eleven 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. CEO Dismissal, Compensation and Topics of Board Meetings: The Case of China By Ji, Jiao; Talavera, Oleksandr; Yin, Shuxing
  3. The Adoption and Termination of Profit Sharing for Employees: Does Management's Attitude Play a Role? By Uwe Jirjahn
  4. The Performance of Elected Officials: Evidence from State Supreme Courts By Elliott Ash; W. Bentley MacLeod
  5. State Capacity and Public Goods: Institutional change, Human Capital and Growth in Early Modern Germany By Jeremiah Dittmar; Ralph R. Meisenzahl
  6. How Does Innovation Differ across Business Functions? Employee-level Analysis of a Multinational Company By Fulvio Castellacci; Magnus Gulbrandsen; Jarle Hildrum; E. Martinkenaite; Erlend Simensen; Vegard Tveito
  7. Increased Instruction Hours and the Widening Gap in Student Performance By Mathias Huebener; Susanne Kuger; Jan Marcus
  8. Female Labor Supply, Human Capital and Welfare Reform By Richard Blundell; Monica Costa Dias; Costas Meghir; Jonathan Shaw
  9. Downsizing, Impairment Recognition Timing, and Non-Executive Employee Ownership: A Japanese Perspective By Keishi Fujiyama
  10. Capital Structure, Pay Structure and Job Termination By Jason Allen; James R. Thompson
  11. How transformational leadership shapes team proactivity: the mediating role of positive affective tone and the moderating role of team task variety By Chia-Huei Wu; Zhen Wang

  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.
    JEL: J01 L2 M2 O32 O33
    Date: 2016–03
  2. By: Ji, Jiao; Talavera, Oleksandr; Yin, Shuxing
    Abstract: Our paper examines the relationship between the frequency of board meetings on particular topics, and CEO dismissal/compensation and performance sensitivities. We utilize a unique dataset of specific topics discussed at board meetings, drawn from the reports of independent directors of listed firms in China over the period of 2003 to 2010. Our results show that turnover-performance sensitivity is weaker when there is a higher frequency of board meetings discussing the nomination of directors and top management. Moreover, the link between CEO compensation and firm performance is enhanced only when directors meet more often to discuss growth strategies for the use of IPO proceeds, investment and acquisitions. The paper provides support for agency theories on the effectiveness of board monitoring. It sheds lights on what makes boards more effective, and how board monitoring of different decisions at board meetings modifies the connection between CEO interests and firm performance.
    Keywords: Board Effectiveness, Board Meeting Topics, Agency Costs, CEO Compensation, CEO Dismissal
    JEL: G30 G34
    Date: 2016–03–23
  3. By: Uwe Jirjahn
    Abstract: Examinations on the determinants of profit sharing usually focus on objective firm characteristics. Using data from manufacturing firms in Germany, this study shows that managers’ subjective attitudes towards profit sharing also play an important role in the adoption and termination of this payment scheme. Positive management attitudes are associated with an increased likelihood of adopting profit sharing. While to some extent this entails failed experimentation, positive managerial attitudes also substantially contribute to a sustained use of profit sharing. The pattern of results holds even when controlling for a variety of objective firm characteristics.
    Keywords: Profit sharing, management attitude, management discretion, subjective factors, experimentation
    JEL: J33 M52
    Date: 2016
  4. By: Elliott Ash; W. Bentley MacLeod
    Abstract: This paper provides evidence on the effect of electoral institutions on the performance of public officials. Using panel data on state supreme courts between 1947 and 1994, we measure the effects of changes in judicial electoral processes on judge work quality – as measured by citations by later judges. Judges selected by non-partisan elections write higher-quality opinions than judges selected by partisan elections. Judges selected by technocratic merit commissions write higher-quality opinions than either partisan-elected judges or non-partisan-elected judges. Election-year politics reduces judicial performance in both partisan and non-partisan election systems. Giving stronger tenure to non-partisan-selected judges improves performance, while giving stronger tenure to partisan-selected judges has no effect. These results are consistent with the view that technocratic merit commissions have better information about the quality of candidates than voters, and that political bias can reduce the quality of elected officials.
    JEL: J24 K4
    Date: 2016–03
  5. By: Jeremiah Dittmar; Ralph R. Meisenzahl
    Abstract: What are the origins and consequences of the state as a provider of public goods? We study legal reforms that established mass public education and increased state capacity in German cities during the 1500s. These fundamental changes in public goods provision occurred where ideological competition during the Protestant Reformation interacted with popular politics at the local level. We document that cities that formalized public goods provision in the 1500s began differentially producing and attracting upper tail human capital and grew to be significantly larger in the long-run. We study plague outbreaks in a narrow time period as exogenous shocks to local politics and find support for a causal interpretation of the relationship between public goods institutions, human capital, and growth. More broadly, we provide evidence on the origins of state capacity directly targeting welfare improvement.
    Keywords: State Capacity, Institutions, Growth, Education, Human Capital, Persistence
    JEL: I25 N13 O11 O43
    Date: 2016–03
  6. By: Fulvio Castellacci (TIK Centre, University of Oslo); Magnus Gulbrandsen (TIK Centre, University of Oslo); Jarle Hildrum (Telenor Research); E. Martinkenaite (Telenor Research); Erlend Simensen (TIK Centre, University of Oslo); Vegard Tveito (TIK Centre, University of Oslo)
    Abstract: This paper investigates how innovation differs across a company’s business functions. We argue that employees working in different functions of a corporation (e.g. marketing, R&D, top management) differ in terms of the types of innovation they are engaged in, the strategies they adopt to organize their innovative activities, and the factors that spur or hamper their innovation performance. Little is known about this issue, however, which we investigate by making use of a rich novel dataset at the employee-level for the multinational company Telenor. We combine a large survey among nearly 16,000 Telenor employees with an extensive qualitative data collection through interviews in different business units and functions. The empirical results point out the relevance of climate and culture, quality-oriented tasks and external interactions as the key factors supporting employees’ innovation activities. The effects of these factors on innovation are substantially different across business functions of the company.
    Date: 2016–03
  7. By: Mathias Huebener; Susanne Kuger; Jan Marcus
    Abstract: Do increased instruction hours improve the performance of all students? Using PISA scores of students in ninth grade, we analyse the effect of a German education reform that increased weekly instruction hours by two hours (6.5 percent) over almost five years. In the additional time, students are taught new learning content. On average, the reform improves student performance. However, treatment effects are small and differ across the student performance distribution. While low-performing students do not benefit, highperforming students benefit the most. The findings suggest that increases in instruction hours can widen the gap between low- and high-performing students.
    Keywords: Instruction time, student achievement, PISA, G8-high school reform, quantile regressions, curriculum, difference-in-differences
    JEL: I21 I24 I28 D04 J24
    Date: 2016
  8. By: Richard Blundell (University College London); Monica Costa Dias (Institute for Fiscal Studies and CEF-UP at the University of Porto); Costas Meghir (Cowles Foundation, Yale University); Jonathan Shaw (Institute for Fiscal Studies and University College London)
    Abstract: We estimate a dynamic model of employment, human capital accumulation - including education, and savings for women in the UK, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer-term effects of policy, increase with education, but experience mainly accumulates when in full-time employment. Tax credits are welfare improving in the UK and increase lone-mother labor supply, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.
    Keywords: Female labor supply, Welfare reform, Tax credits, Education choice, Dynamic discrete choice models, Life cycle models
    JEL: H2 H3 J22 J24
    Date: 2013–04
  9. By: Keishi Fujiyama (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: It has been suggested in the literature that—given the long-term relationship between firms and employees—managers accelerate conservative accounting in prospect of employee negotiations to inform their employees of the firms' underlying economics. This study extends the existing literature by investigating whether a variation in employee influence in firms leads to different impairment accounting practices. Specifically, in the investigation of Japanese firms operating in a society where collective dismissals are difficult to implement, I find that firms with strong employee influence are less likely to downsize their employees, suggesting that such firms face stronger resistance from employees than those with weak employee influence. I also find that firms with strong employee influence that are contemplating downsizing recognize fixed asset impairment losses earlier than those with weak employee influence, suggesting that such an accounting practice by downsizing firms with strong employee influence elicits concessions from employees. In addition, the results indicate that shareholders and management also make concessions around downsizing implementation. Overall, the findings of this study suggest that accounting practices chosen by firms with strong employee influence are derived not from opportunistic purposes, but from informative motives.
    Keywords: Labor negotiation, Fixed asset impairment, Employee ownership, Downsizing
    JEL: G34 J54 M41
    Date: 2016–03
  10. By: Jason Allen; James R. Thompson
    Abstract: We develop a model to analyze the link between financial leverage, worker pay structure and the risk of job termination. Contrary to the conventional view, we show that even in the absence of any agency problem among workers, variable pay can be optimal despite workers being risk averse and firms risk neutral. We find that firms employing workers with safer projects (and lower probability of job termination) use more variable compensation, and that leverage is strictly increasing in the amount of variable pay. These two results lead to the main insight of the paper: the more likely it is that a worker is terminated, the lower a firm’s leverage. We provide empirical support for these predictions with a novel data set of all Canadian financial brokers and dealers. In the context of our empirical analysis, the model provides a novel mechanism to help explain why high leverage and high amounts of variable pay may be pervasive in financial relative to non-financial institutions.
    Keywords: Financial Institutions, Labour markets
    JEL: G24 J33
    Date: 2016
  11. By: Chia-Huei Wu; Zhen Wang
    Abstract: The authors examine how and when transformational leadership can contribute to team proactivity. Drawing on the affect-as-resources perspective, they propose that transformational leadership will contribute to team proactivity by cultivating positive group affective tone within teams. They further indicate that the function of positive group affective tone in shaping team proactivity will be stronger when team task variety is higher. These hypotheses were supported by results based on 76 teams in the same organization. The results reveal that the mediation effect of positive group affective tone on the association between transformational leadership and team proactivity is stronger when team task variety is high rather than low. This investigation contributes to the literature by suggesting how to promote proactivity at a team level.
    Keywords: transformational leadership; proactivity; group affective tone; work design; team
    JEL: J50
    Date: 2015

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