nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒05‒08
thirteen papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Effects of Financial and Recognition Incentives Across Work Contexts: The Role of Meaning By Kosfeld, Michael; Neckermann, Susanne; Yang, Xiaolan
  2. The Long-term Consequences of Teacher Discretion in Grading of High-stakes Tests By Rebecca Diamond; Petra Persson
  3. Working Hours, Promotion, and Gender Gaps in the Workplace By KAWAGUCHI Daiji; OWAN Hideo; TAKAHASHI Kazuteru
  4. Entrepreneurial Choices of Initial Human Capital Endowments and New Venture Success By Vera Rocha; Mirjam van Praag; Timothy B. Folta; Anabela Carneiro
  5. What Motivates Effort? Evidence and Expert Forecasts By Stefano DellaVigna; Devin Pope
  6. Ambiguity about the chances of winning represents a key aspect in lotteries. By means of a controlled field experiment, we exogenously vary the degree of ambiguity about the winning chances of lotteries organized to incentivize the contribution for a publi By Julian Conrads; Rainer Rilke; Tommaso Reggiani
  7. Delay and deadlines: freeriding and information revelation in partnerships By Arthur Campbell; Florian Ederer; Johannes Spinnewijn
  8. The Impact of Investment in Human Capital on Economic Development: An Empirical Exercise Based on Height and Years of Schooling in Spain (1881-1998) By Enriqueta Camps
  9. Patience and the Wealth of Nations By Thomas Dohmen; Benjamin Enke; Armin Falk; David Huffman; Uwe Sunde
  10. Workers' Mental Health, Long Work Hours, and Workplace Management: Evidence from workers' longitudinal data in Japan By KURODA Sachiko; YAMAMOTO Isamu
  11. Mental Health and Productivity at Work: Does What You Do Matter? By Bubonya, Melisa; Cobb-Clark, Deborah A.; Wooden, Mark
  12. Corporate Social Responsibility and Gender Diversity in the Workplace: Evidence from Japan By KATO Takao; KODAMA Naomi
  13. Motivational Ratings By Johannes Horner; Nicolas Lambert

  1. By: Kosfeld, Michael; Neckermann, Susanne; Yang, Xiaolan
    Abstract: We manipulate workers' perceived meaning of a job in a field experiment and interact meaning of work with both financial and recognition incentives. Results show that workers exert more effort when meaning is high. Money has a positive effect on performance that is independent of meaning. In contrast, meaning and recognition interact negatively. Our results provide new insights into the stability of incentive effects across important work contexts. They also suggest that meaning and worker recognition may operate via the same motivational channel.
    Keywords: context factors; field experiment; interactions; meaning; monetary incentives; worker recognition
    JEL: C93 J33 M12 M52
    Date: 2016–04
  2. By: Rebecca Diamond; Petra Persson
    Abstract: This paper analyzes the long-term consequences of teacher discretion in grading of high-stakes tests. Evidence is currently lacking, both on which students receive test score manipulation and on whether such manipulation has any real, long-term consequences. We document extensive test score manipulation of Swedish nationwide math tests taken in the last year before high school, by showing significant bunching in the distribution of test scores above discrete grade cutoffs. We find that teachers use their discretion to adjust the test scores of students who have "a bad test day," but that they do not discriminate based on gender or immigration status. We then develop a Wald estimator that allows us to harness quasi-experimental variation in whether a student receives test score manipulation to identify its effect on students' longer-term outcomes. Despite the fact that test score manipulation does not, per se, raise human capital, it has far-reaching consequences for the beneficiaries, raising their grades in future classes, high school graduation rates, and college initiation rates; lowering teen birth rates; and raising earnings at age 23. The mechanism at play suggests important dynamic complementarities: Getting a higher grade on the test serves as an immediate signaling mechanism within the educational system, motivating students and potentially teachers; this, in turn, raises human capital; and the combination of higher effort and higher human capital ultimately generates substantial labor market gains. This highlights that a higher grade may not primarily have a signaling value in the labor market, but within the educational system itself.
    JEL: I20 J24
    Date: 2016–04
  3. By: KAWAGUCHI Daiji; OWAN Hideo; TAKAHASHI Kazuteru
    Abstract: This paper presents a model of promotion which features two different sources of asymmetric information—disutility of working long hours and on the job training (OJT) ability, or the ability to accumulate human capital on the job via learning by doing. The former is the worker's private information while the latter is the employer's. The firm decides whether or not to reveal its private information on the worker's OJT ability to him/her and how much training it provides to him/her. The worker chooses working hours to signal its commitment to the firm. We show that there always is a separating equilibrium in which the worker's working hours fully reveal his/her commitment level. The firm's optimal feedback policy depends on the nature of the training and learning, and the level of overtime pay. Not revealing private information on the worker's ability could be optimal for the firm under certain circumstances. We argue that two recent changes in the Japanese human resource management system—more selective training and an increasing share of occupations exempt from overtime work payment—may be making information revelation optimal for many firms. We further show that revealing information on the worker's ability tends to be optimal for the firm when many in the workforce have high disutility of working long hours. As such, if the firm can use different feedback policies for men and women, it may reveal its private information on the worker's ability only to women but not to men. If this is the case, there is a testable implication: the incidence of promotion should be more highly correlated with the number of hours worked for women than for men. Using personnel records of a large Japanese manufacturing firm, we find evidence in support of this prediction.
    Date: 2016–03
  4. By: Vera Rocha (Copenhagen Business School, Denmark); Mirjam van Praag (Copenhagen Business School, Denmark); Timothy B. Folta (University of Connecticut, United States); Anabela Carneiro (University of Porto, Portugal)
    Abstract: The founder (team)’s human capital is a vital determinant of future firm performance. This is a stylized fact. Less is known about the effect of the human capital of the initial workforce hired by the founder(s). We study the performance consequences of a founder’s choice of the initial workforce’s human capital (quantity and quality), besides the human capital of the founder(s). The analysis is based on matched employer-employee data and covers about 5,300 startups in manufacturing industries founded by individuals coming from employment between 1992 and 2007. We acknowledge that initial hiring decisions are endogenous and correlated with the human capital of the founders and the ownership structure of startups (single founder versus team of founders). Given the stickiness of initial choices, human capital decisions at entry turn out to be a close to irreversible matter with significant implications for post-entry survival and growth of the firm.
    Keywords: Human capital; entrepreneurship; startups; firm performance
    JEL: J24 L26 M13
    Date: 2016–04–22
  5. By: Stefano DellaVigna; Devin Pope
    Abstract: How much do different monetary and non-monetary motivators induce costly effort? Does the effectiveness line up with the expectations of researchers? We present the results of a large-scale real-effort experiment with 18 treatment arms. We compare the effect of three motivators: (i) standard incentives; (ii) behavioral factors like present-bias, reference dependence, and social preferences; and (iii) non-monetary inducements from psychology. In addition, we elicit forecasts by behavioral experts regarding the effectiveness of the treatments, allowing us to compare results to expectations. We find that (i) monetary incentives work largely as expected, including a very low piece rate treatment which does not crowd out incentives; (ii) the evidence is partly consistent with standard behavioral models, including warm glow, though we do not find evidence of probability weighting; (iii) the psychological motivators are effective, but less so than incentives. We then compare the results to forecasts by 208 experts. On average, the experts anticipate several key features, like the effectiveness of psychological motivators. A sizeable share of experts, however, expects crowd-out, probability weighting, and pure altruism, counterfactually. This heterogeneity does not reflect field of training, as behavioral economists, standard economists, and psychologists make similar forecasts. Using a simple model, we back out key parameters for social preferences, time preferences, and reference dependence, comparing expert beliefs and experimental results.
    JEL: C9 C93 D03
    Date: 2016–04
  6. By: Julian Conrads; Rainer Rilke; Tommaso Reggiani
    Abstract: Ambiguity about the chances of winning represents a key aspect in lotteries. By means of a controlled field experiment, we exogenously vary the degree of ambiguity about the winning chances of lotteries organized to incentivize the contribution for a public good. In one treatment, people have been simply informed about the maximum number of potential participants (i.e. the number of lottery tickets released). In a second treatment, this information has been omitted as in all traditional lotteries. Our general finding shows that simply reducing the degree of ambiguity of the lottery leads to a sizable and significant increase (67%) in the participation rate. This result is robust to alternative prize configurations.
    Date: 2016
  7. By: Arthur Campbell; Florian Ederer; Johannes Spinnewijn
    Abstract: We study two sources of delay in teams: freeriding and lack of communication. Partners contribute to the value of a common project, but have private information about the success of their own efforts. When the deadline is far away, unsuccessful partners freeride on each others' efforts. When the deadline draws close, successful partners stop revealing their success to maintain their partners' motivation. We derive comparative statics results for common team performance measures and find that the optimal deadline maximizes productive efforts while avoiding unnecessary delays. Welfare is higher when information is only privately observable rather than revealed to the partnership.
    JEL: D82 D83 M54 O30
    Date: 2014–05
  8. By: Enriqueta Camps
    Abstract: Throughout the 19th century and until the mid-20th century, in terms of long-term investment in human capital and, above all, in education, Spain lagged far behind the international standards and, more specifically, the levels attained by its neighbours in Europe. In 1900, only 55% of the population could read; in 1950, this figure was 93%. This paper provides evidence that these conditions contributed to a pattern of slower economic growth in which the physical strength required for agricultural work, measured here through height, had a larger impact than education on economic growth. It was not until the 1970s, with the arrival of democracy, that the Spanish education system was modernized and the influence of education on economic growth increased.
    Keywords: employment structure, human capital, educational offer, economic growth
    JEL: I2 I1 J3 J8 N3
    Date: 2016–04
  9. By: Thomas Dohmen (Universität Bonn); Benjamin Enke (University of Bonn); Armin Falk (Universität Bonn); David Huffman (University of Pittsburgh); Uwe Sunde (University of Munich)
    Abstract: According to standard dynamic choice theories, patience is a key driving factor behind the accumulation of the proximate determinants of economic development. Using a novel representative data set on time preferences from 80,000 individuals in 76 countries, we investigate the empirical relevance of this hypothesis in the context of a development accounting framework. We find a significant reduced-form relationship between patience and development in terms of contemporary income as well as medium- and long-run growth rates, with patience explaining a substantial fraction of development differences across countries. Consistent with the idea that patience affects national income through accumulation processes, patience also strongly correlates with human and physical capital accumulation, investments into productivity, and institutional quality. Additional results show that the relationship between patience, human capital, and income extends to analyses across regions within countries, and across individuals within regions.
    Keywords: time preference, comparative development, growth, savings, human capital, physical capital, innovation, institutions
    JEL: D03 D90 O10
    Date: 2016–04
  10. By: KURODA Sachiko; YAMAMOTO Isamu
    Abstract: Overwork is widely acknowledged as the main culprit behind mental health issues, but research in social science and epidemiology seldomly considers an adequate range of factors when investigating that connection. Using longitudinal data of Japanese workers over four consecutive years, this study investigates how the number of hours worked, job characteristics, and workplace circumstances affect workers' mental health. Using widely used scores in epidemiology to measure the degrees of mental health (General Health Questionnaire), our main findings are as follows. First, long work hours contribute significantly to deteriorations in respondents' mental health, even after controlling for individual fixed effects and other characteristics. Second, the relationship between work hours and mental health is not linear. Working more than 50 hours per week notably erodes the mental health of workers. Third, clear job descriptions, ability to exercise discretion in performing tasks, and workplace atmosphere significantly influence respondents' mental health after controlling for hours worked. Fourth, if a coworker is suffering from mental illness at the workplace, the mental health of other workers are also likely to be poor. These findings suggest that proper workplace practices, including management of work hours, would affirmatively improve workers' mental health.
    Date: 2016–03
  11. By: Bubonya, Melisa (Melbourne Institute of Applied Economic and Social Research); Cobb-Clark, Deborah A. (University of Sydney); Wooden, Mark (Melbourne Institute of Applied Economic and Social Research)
    Abstract: Much of the economic cost of mental illness stems from workers' reduced productivity. We analyze the links between mental health and two alternative workplace productivity measures – absenteeism and presenteeism (i.e., lower productivity while attending work) – explicitly allowing these relationships to be moderated by the nature of the job itself. We find that absence rates are approximately five percent higher among workers who report being in poor mental health. Moreover, job conditions are related to both presenteeism and absenteeism even after accounting for workers' self-reported mental health status. Job conditions are relatively more important in understanding diminished productivity at work if workers are in good rather than poor mental health. The effects of job complexity and stress on absenteeism do not depend on workers' mental health, while job security and control moderate the effect of mental illness on absence days.
    Keywords: mental health, presenteeism, absenteeism, work productivity
    JEL: I12 J22 J24
    Date: 2016–04
  12. By: KATO Takao; KODAMA Naomi
    Abstract: Using panel data on corporate social responsibility (CSR) matched with corporate proxy statement data for a large and representative sample of 1,492 publicly-traded firms in Japan over 2006-2014, we provide rigorous econometric evidence on the effects of CSR on gender diversity in the workplace. Our fixed effect estimates point to positive and significant effects on gender diversity of CSR, yet the effects are felt only after two to three years. Such CSR effects are found to be larger and more significant for firms that adhere more closely to the traditional Japanese management model with employee stakeholder salience, which is mostly consistent with an influential theory of CSR--the theory of stakeholder salience. The magnitude of the effects is neither trivial nor implausibly large. For those firms that adhere closely to the participatory model, one standard deviation increase in our summary CSR score, after three years, will result in 0.8 more female college graduate hires from its mean of 17.5; 1.7 more female managers from its mean of 26.2; and 0.16 more female directors from its mean of 1.69. Finally, the positive and significant CSR effects on gender diversity are found to be robust to the inclusion of controls capturing the possible effects of various work-life balance (WLB) practices on gender diversity, pointing to the direct impact of CSR on gender diversity rather than the CSR effects mediated by WLB. In designing and revising various public policies to achieve their current key policy goal of advancement of women in the labor market, Japanese policy makers may want to pay more attention to a potentially important role that CSR plays in gender diversity in the workplace in general and the heterogeneity of the CSR effects and their considerable gestation period in particular.
    Date: 2016–04
  13. By: Johannes Horner (Cowles Foundation, Yale University); Nicolas Lambert (Stanford Graduate School of Business - Knight Management Center)
    Abstract: Rating systems not only provide information to users but also motivate the rated agent. This paper solves for the optimal (effort-maximizing) rating system within the standard career concerns framework. It is a mixture two-state rating system. That is, it is the sum of two Markov processes, with one that reflects the belief of the rater and the other the preferences of the rated agent. The rating, however, is not a Markov process. Our analysis shows how the rating combines information of different types and vintages. In particular, an increase in effort may affect some (but not all) future ratings adversely.
    Keywords: Career Concerns, Mechanism Design, Ratings
    JEL: C72 C73
    Date: 2016–04

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