nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒05‒28
eleven papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Cooperation or Competition? A field experiment on non-monetary learning incentives By Margherita Fort; Maria Bigoni; Mattia Nardotto; Tommaso Reggiani
  2. Preference for the Workplace, Human Capital, and Gender By Matthew Wiswall; Basit Zafar
  3. Relative Wealth Concerns, Executive Compensation, and Systemic Risk-Taking By Liu, Qi; Sun, Bo
  4. Incentivizing creativity: A large-scale experiment with tournaments and gifts By Bradler, Christiane; Neckermann, Susanne; Warnke, Arne Jonas
  5. Career Implications of Having a Female-Friendly Supervisor By Bednar, Steven; Gicheva, Dora
  6. How an effective leadership and governance supports to achieve institutional vision, mission and objectives By Aithal, Sreeramana
  7. Naturalisation and Investments in Children's Human Capital: Evidence from a Natural Experiment By von Haaren-Giebel, Friederike
  8. Work, train, win: work-based learning design and management for productivity By Viktoria Kis
  9. The Evolution of Human Capital in Africa, 1730 -1970: A Colonial Legacy? By Baten, Jörg; Cappelli, Gabriele
  10. Heterogeneity in the Gender Wage Gap in Canada By Luiza Antonie; Miana Plesca; Jennifer Teng
  11. Designing Contests Between Heterogeneous Contestants: An Experimental Study of Tie-Breaks and Bid-Caps in All-Pay Auctions By Aniol Llorente-Saguer; Roman M. Sheremeta; Nora Szech

  1. By: Margherita Fort; Maria Bigoni; Mattia Nardotto; Tommaso Reggiani
    Abstract: We assess the effect of two antithetic non-monetary incentive schemes based on grading rules on students' effort, using experimental data. We randomly assigned students to a tournament scheme that fosters competition between paired up students, a cooperative scheme that promotes information sharing and collaboration between students and a baseline treatment in which students can neither compete nor cooperate. In line with theoretical predictions, we find that competition induces higher effort with respect to cooperation, whereas cooperation does not increase effort with respect to the baseline treatment. Nonetheless, we find a strong gender effect since this result holds only for men while women do not react to this type of non-monetary incentives.
    Date: 2015
  2. By: Matthew Wiswall; Basit Zafar
    Abstract: In this paper, we use a hypothetical choice methodology to robustly estimate preferences for workplace attributes and quantify how much these preferences influence pre-labor market human capital investments. Undergraduate students are presented with sets of job offers 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), and men have a higher willingness to pay for jobs with higher earnings growth. Using a follow-up survey several years after the experiment, we find a systematic relationship between the respondents' job preferences as revealed during college and the actual workplace characteristics of the jobs these individuals are currently working at after college. In the second part of the paper, we relate these job attribute preferences to major choice. Using data on students' perceptions about the demand side of the labor market--beliefs about expected attributes of jobs students anticipate being offered if they were to complete particular majors--we find that students perceive jobs offered to Humanities majors to have fewer hours, more work-time 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 non-pecuniary job attributes in major choice.
    JEL: J16 J24
    Date: 2016–04
  3. By: Liu, Qi; Sun, Bo
    Abstract: Given the recent empirical evidence on peer effects in CEO compensation, this paper theoretically examines how relative wealth concerns, in which a manager’s satisfaction with his own compensation depends on the compensation of other managers, affect the equilibrium contracting strategy and managerial risk-taking. We find that such externalities can generate pay-for-luck as an efficient compensation vehicle in equilibrium. In expectation of pay-for-luck in other firms, tying managerial pay to luck provides insurance to managers against a compensation shortfall relative to executive peers during market fluctuations. When all firms pay for luck, we show that an effort-inducing mechanism exists: managers have additional incentives to exert effort in utilizing investment opportunities, which helps them keep up with their peers during industry movements. In addition, we show that compensation arrangements involving pay-for-luck that are efficient from the shareholders’ perspective can nonetheless exacerbate aggregate fluctuations in the real economy by incentivizing excessive systemic risk-taking, especially in periods of heightened risk.
    Keywords: Relative wealth concerns ; Managerial compensation ; Pay-for-luck ; Excessive risk-taking
    JEL: D82 D86
    Date: 2016–05
  4. By: Bradler, Christiane; Neckermann, Susanne; Warnke, Arne Jonas
    Abstract: This paper reports the results from a large-scale laboratory experiment investigating the impact of tournament incentives and wage gifts on creativity. We find that tournaments substantially increase creative output, with no evidence for crowding out of intrinsic motivation. By comparison, wage gifts are ineffective. Additional treatments show that it is the uncertain mapping between effort and output that inhibits reciprocity. This uncertainty is prevalent in creative and other complex tasks. Our findings provide a rationale for the frequent use of tournaments when seeking to motivate creative output.
    Keywords: creativity,incentives,tournament,reciprocity,experiment,crowding-out
    JEL: C91 D03 J33 M52
    Date: 2016
  5. By: Bednar, Steven (Elon University); Gicheva, Dora (University of North Carolina at Greensboro, Department of Economics)
    Abstract: Supervisor attributes, such as race or gender, are thought to play an important role in employee hiring, career advancement and turnover even in the absence of discrimination. For example, supervisors may be better able to infer the true ability of a worker if they have a common attribute (Cornell and Welch 1996) or it could be that mentoring is an important determinant of employees' career trajectories and is more effective if the workers and supervisors are of the same type (Athey, Avery and Zemsky 2000). Embedded in this idea are important policy implications for alleviating the gender wage gap and other adverse career outcomes for females. In our paper we introduce a type-based mentoring model of worker productivity and turnover in which human capital production is contingent on the worker's gender and the supervisor's type. We allow for a flexible definition of "type" based on the supervisor's attitude toward working with females. Using a longitudinal data set in which workers with a high level of managerial responsibility are observed at multiple establishments over time, we construct a measure of revealed supervisor female-friendliness above and beyond the institution-specific culture by comparing changes in the gender composition of workers at lower levels of the firm. We adjust the measure to account for its potential endogeneity with respect to the outcomes that we study and use it to test empirically the predictions of a type-based mentoring model against a model of pure taste-based discrimination. We add to the literature by proposing the idea that it may be necessary to be more flexible when defining "type" in the mentoring relationship. We argue that, in addition to demographics, supervisors can be characterized by a more complexly defined inherent attitude toward working with and mentoring females, which can vary within observable supervisor characteristics, and that the existing literature has left unexplored areas by limiting its focus on leaders' observable characteristics. Implementing our definition of female-friendliness empirically requires us to use a novel data set with information on both supervisors and lower-level workers, in which high-level managerial employees are followed across establishments. We link the theoretical idea of type-based mentoring to observed career outcomes and test whether females are more likely to benefit in terms of career progression when matched with a supervisor with a more favorable attitude toward mentoring women. While our study focuses on a very specific labor market setting, described in Section 3, our findings offer strong support for the importance of type-based mentoring in the labor market and in addition should motivate researchers to use broader definitions of "type" that include harder to infer attitudes in addition to directly observable supervisor and worker attributes such as gender.
    Keywords: gender; labor market
    JEL: J31 J70
    Date: 2016–04–16
  6. By: Aithal, Sreeramana
    Abstract: Effective leadership by setting values and participative decision- making process is key not only to achieve the vision, mission and goals of the institution but also in building the organizational culture. The formal and informal arrangements in the institution to co-ordinate the academic and administrative planning and implementation reflects the institutions efforts in achieving its vision. This paper focus on the vision, mission and the objectives identified for a higher education institution and needs to be addressed through its distinctive characteristics by considering Srinivas Institute of Management Studies as an example. The role of top management, principal and faculty in design and implementation of its quality policy and plans both in Teaching and Services are identified. The involvement of the leadership in ensuring the policy statements and action plans for fulfillment of the stated mission, formulation of action plans for all operations and incorporation of the same into the institutional strategic plan, Interaction with stakeholders, Proper support for policy and planning through need analysis, research inputs and consultations with the stakeholders, Reinforcing the culture of excellence, and Champion organizational change. The various procedures adopted by the institution to monitor and evaluate policies and plans of the institution for effective implementation and improvement from time to time are discussed. Details of the academic leadership provided to the faculty by the top management, the college strategy to groom leadership at various levels, How does the college delegate authority and provide operational autonomy to the departments / units of the institution and work towards decentralized governance system, and the strategy of college to promote a culture of participative management are elaborated.
    Keywords: Effective leadership, Governance in Higher education, Efficiency in higher education institutions
    JEL: I2 I23
    Date: 2015–05
  7. By: von Haaren-Giebel, Friederike
    Abstract: This paper assesses educational attainment of immigrant children, in particular evaluating whether naturalised parents invest more in their children's human capital than non-naturalised parents. Findings of the literature indicate that citizenship is associated with lower return migration probability. Since the returns to investments in (country-specific) human capital increase with the duration of residence, naturalised parents may have more incentives to invest in the educational success of their children. I exploit a natural experiment that took place in Germany in the year 2000 that reduced the required years of residence for naturalisation from 15 to 8 and therefore exogenously increased naturalisation. Multivariate estimations (based on the German Socio-Economic Panel) show a positive and significant correlation between parents' citizenship status and their children's educational attainment. Results of difference-in-differences and instrumental variable models are also positive but not significant.
    Keywords: citizenship; integration; education; SOEP
    JEL: J15 J24 I24
    Date: 2016–05
  8. By: Viktoria Kis
    Abstract: Realising the potential of work-based learning schemes as a driver of productivity requires careful design and support. The length of work-based learning schemes should be adapted to the profile of productivity gains. A scheme that is too long for a given skill set might be unattractive for learners and waste public resources, but a scheme that is too short will fail to attract employer interest. Ensuring that the design of work-based learning schemes balances the interests of both employer and trainee is key to successful implementation. Carefully organising what trainees do while in the workplace and integrating learning into productive work can yield higher benefits for firms, while maintaining the quality of learning. Strengthening capacity within firms to effectively manage work-based learning can help achieve this. Enhancing that capacity, for example through training for trainee supervisors can help employers reap more benefits from work-based learning schemes while meeting quality requirements. Les programmes d’apprentissage en milieu professionnel doivent être conçus avec soin et mis en oeuvre de façon appropriée si l’on veut exploiter pleinement les possibilités qu’ils offrent en tant que moteurs de la productivité. La durée de ces programmes devrait être adaptée au profil des gains de productivité. Un programme qui est trop long pour acquérir un ensemble donné de compétences risque de ne pas attirer les apprentis et de gaspiller les ressources publiques, tandis qu’un programme trop court ne suscitera pas l’intérêt des employeurs. Il est donc essentiel à la bonne mise en oeuvre des programmes d’apprentissage en milieu professionnel qu’ils soient conçus de façon à répondre aux besoins à la fois des employeurs et des stagiaires. Le fait d’organiser avec soin les tâches des stagiaires sur le lieu de travail et d’intégrer l’apprentissage dans un travail productif peut procurer aux entreprises des avantages accrus, tout en maintenant la qualité de l’apprentissage. La capacité des entreprises à gérer l’apprentissage efficacement en interne contribue à atteindre ces objectifs. Renforcer cette capacité, par exemple en offrant une formation aux maîtres de stage, peut aider les employeurs à tirer davantage profit des programmes d’apprentissage en milieu professionnel tout en répondant à des exigences de qualité.
    Date: 2016–05–20
  9. By: Baten, Jörg; Cappelli, Gabriele
    Abstract: How did colonialism interact with the development of human capital in Africa? We create an innovative panel dataset on numeracy across African countries before, during and after the Scramble for Africa (1730 -1970) by drawing on new sources and by carefully assessing potential selection bias. The econometric evidence that we provide, based on OLS, 2SLS and Propensity Score Matching, shows that colonialism had very diverse effects on human capital depending on the education policy of the colonizer. Although the average marginal impact of colonialism on the growth of numeracy was positive, the premium that we find was driven by the British educational system. Especially after 1900, the strategies chosen by the British were associated with faster human-capital accumulation, while other colonies were characterized by a negative premium on the growth of education. We connect this finding to the reliance of British education policy on mission schools, which used local languages and the human capital of local teachers to expand schooling in the colonies. We also show that this, in turn, had long-lasting effects on economic growth, which persist to the present day.
    Keywords: Africa; Colonialism; Education Policy; Human Capital; Numeracy
    JEL: N37 O15
    Date: 2016–05
  10. By: Luiza Antonie (School of Computer Science, University of Guelph); Miana Plesca (Department of Economics and Finance, University of Guelph); Jennifer Teng (Independent Researcher)
    Abstract: There is significant heterogeneity in the male-female wage gap depending on individuals’ education, income, and labour supply choices. Using data from the Canadian Census and from the Labour Force Survey, we document to what extent the gap in hourly wages gets compounded by a gender gap in hours worked, making the annual gender pay gap much larger. Within fulltime full-year, full-time part year, and part-time jobs, we find much smaller gaps than the overall one, even conditional on detailed occupations. This suggests a different selection by gender into full-time and part-time jobs, with women of higher earnings potential selecting into part-time work. We document that men are more likely to be promoted than women, regardless of marital status, while women are more likely to select into part-time jobs or be absent from work if they have children in their care. Furthermore, the wage gap is very small for younger people and it increases with age, even for single individuals, providing suggestive evidence for statistical discrimination. The male-female wage gap decreases with education, at all quantiles of the income distribution, except for a glass ceiling effect observable for the top 10% of the university wage distribution. We look more deeply at this glass ceiling effect by assigning gender to the individuals on Ontario’s Sunshine list of public salary disclosure for top earners. We document a gender imbalance on the list, with twice more men than women making the list, but no substantive gender wage gap. Given all these findings, we contend that wage equality in the labour market can only be achieved in conjunction with gender equality in the household, and that effective policies to target the remaining wage gap should address labour supply and child rearing channels.
    Keywords: Gender wage gap, Pay equity
    JEL: J31 J16 J38
    Date: 2016
  11. By: Aniol Llorente-Saguer (School of Economics and Finance, Queen Mary University of London); Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and Economic Science Institute, Chapman University); Nora Szech (Institute of Economics, Karlsruhe Institute of Technology and WZB and CESifo Institute)
    Abstract: A well-known theoretical result in the contest literature is that greater heterogeneity decreases performance of contestants because of the “discouragement effect.” Leveling the playing field by favoring weaker contestants through bid-caps and favorable tie-breaking rules can reduce the discouragement effect and increase the designer’s revenue. We test these predictions in an experiment. Our data show that indeed, strengthening weaker contestants through tie-breaks and bid-caps significantly diminishes the discouragement effect. Bid-caps can also improve revenue. Most deviations from Nash equilibrium can be explained by the level-k model of reasoning.
    Keywords: all-pay auction, rent-seeking, bid-caps, tie-breaks, contest design
    JEL: C72 C91 D72
    Date: 2016

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