nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒08‒07
twelve papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Competition Between For-Profit and Non-Profit Firms: Incentives, Workers’ Self-Selection, and Wage Differentials By F. Barigozzi; N. Burani
  2. Inequality and Growth: The Role of Human Capital with Heterogeneous Skills By Borissov, Kirill; Bosi, Stefano; Ha-Huy, Thai; Modesto, Leonor
  3. The "Entrepreneurial Boss" Effect on Employees' Future Entrepreneurship Choices: A Role Model Story? By Rocha, Vera; van Praag, Mirjam C.
  4. Recovery from Work and the Productivity of Working Hours By Pencavel, John
  5. Performance Pay and Malnutrition By Singh, Prakarsh; Mitra, Sandip
  6. Does Experience Affect Fairness and Reciprocity in Lab Experiments? By Tiziana Medda; Vittorio Pelligra; Tommaso Reggiani
  7. Are Online Labor Markets Spot Markets for Tasks?: A Field Experiment on the Behavioral Response to Wage Cuts By Chen, Daniel L.; Horton, John
  8. CEO Incentives: Measurement, Determinants, and Impact on Performance By Peng, Lin; Roell, Ailsa; Tang, Hongfei
  9. Augmenting the Human Capital Earnings Equation with Measures of Where People Work By Erling Barth; James Davis; Richard B. Freeman
  10. New and Revised Results for 'Building Reputation for Contract Renewal: Implications for Performance Dynamics and Contract Duration' By Vanessa Kummer; Maik Meusel; Philipp Renner; Karl Schmedders
  11. Temporary Jobs and the Severity of Workplace Accidents By Picchio, Matteo; van Ours, Jan
  12. Workplace Disability: Whose Wellbeing Does It Affect? By Haile, Getinet Astatike

  1. By: F. Barigozzi; N. Burani
    Abstract: We study optimal non-linear contracts offered by two firms competing for the exclusive services of workers, who are privately informed about their ability and motivation. Firms differ in their organizational form, and motivated workers are keen to be hired by the non-profit firm because they adhere to its mission. If the for-profit firm has a competitive advantage over the non-profit firm, the latter attracts fewer high-ability workers with respect to the former. Moreover, workers exert more effort at the for-profit than at the non-profit firm despite the latter distorts effort levels upwards. Finally, a wage penalty emerges for non-profit workers which is partly due to compensating effects (labor donations by motivated workers) and partly due to the negative selection of ability into the non-profit firm. The opposite results hold when it is the non-profit firm that has a competitive advantage.
    JEL: D82 D86 J24 J31 M55
    Date: 2016–07
  2. By: Borissov, Kirill (European University of St. Petersburg); Bosi, Stefano (University of Evry); Ha-Huy, Thai (University of Evry); Modesto, Leonor (Universidade Catolica Portuguesa, Lisbon)
    Abstract: We extend the Lucas' 1988 model introducing two classes of agents with heterogeneous skills, discount factors and initial human capital endowments. We consider two regimes according to the planner's political constraints. In the first regime, that we call meritocracy, the planner faces individual constraints. In the second regime the planner faces an aggregate constraint, redistributing. We find that heterogeneity matters, particularly with redistribution. In the meritocracy regime, the optimal solution coincides with the BGP found by Lucas (1988) for the representative agent's case. In contrast, in the redistribution case, the solution for time devoted to capital accumulation is never interior for both agents. Either the less talented agents do not accumulate human capital or the more skilled agents do not work. Moreover, social welfare under the redistribution regime is always higher than under meritocracy and it is optimal to exploit existing differences. Finally, we find that inequality in human capital distribution increases in time and that, in the long run, inequality always promotes growth.
    Keywords: human capital, heterogeneous skills
    JEL: J24 O15 O40
    Date: 2016–07
  3. By: Rocha, Vera (Copenhagen Business School); van Praag, Mirjam C. (Copenhagen Business School)
    Abstract: Both organizational and sociological approaches in entrepreneurship research highlight the importance of social context in shaping individual preferences for entrepreneurship. An influential contextual factor that has not been studied in entrepreneurship research is one's boss at work. Do entrepreneurial bosses contribute to their employees' decisions to become entrepreneurs themselves? Using Danish register data of newly founded firms and their entrepreneurs and employees between 2003 and 2012, and employing methods that allow causal inferences, we show that entrepreneurial bosses indeed affect their employees' future entrepreneurship choices, especially if both boss and employee are female. We investigate two alternative underlying mechanisms that may shape the (female) boss' influence on (female) workers' entrepreneurship decisions. Our results consistently suggest that entrepreneurial bosses may act as role models for the entrepreneurship activities of their employees, especially between pairs of female bosses and female employees. We do not find any evidence on female bosses acting as "queen bees" at the workplace. Female entrepreneurial bosses may, thus, act as a lever to reducing the gender gaps in entrepreneurship rates.
    Keywords: entrepreneurship, role models, gender gaps, female leadership
    JEL: L26 J24 J16
    Date: 2016–07
  4. By: Pencavel, John (Stanford University)
    Abstract: Observations on munition workers are organized to examine the relationship between their output each week, their working hours and days each week, and their working hours and days in adjacent weeks. The hypothesis is that workers need to recover from work and a long working week results in greater fatigue and stress and yet provides insufficient time for recuperation before the next week's work opens. Workers require time off the job to restore their physical, mental, and emotional capacities and, if a long working week provides inadequate time to repair, their subsequent work performance suffers.
    Keywords: working hours, output, productivity, recovery
    JEL: J24 J22 N34
    Date: 2016–07
  5. By: Singh, Prakarsh (Amherst College); Mitra, Sandip (Indian Statistical Institute)
    Abstract: We carry out a randomized controlled experiment in West Bengal, India to test three separate performance pay treatments in the public health sector. Performance is judged on improvements in child malnutrition. We exogenously change wages of government employed child care workers through either absolute or relative incentives. We also test for the impact of high and low absolute incentives. Results show that high absolute incentives reduce severe malnutrition by 6.3 percentage points over three months. Result is consistent with a reported increase in protein-rich diet at home in the high absolute treatment. There are no significant effects on health outcomes of other incentive arms. Results remain robust to propensity score matching, reversion- to-mean and a placebo check.
    Keywords: performance pay, child malnutrition, absolute and relative incentives
    JEL: M52 I12 I38 J38
    Date: 2016–07
  6. By: Tiziana Medda (University of Cagliari); Vittorio Pelligra (University of Cagliari); Tommaso Reggiani (LUMSA University)
    Abstract: One of the most common criticisms about the external validity of lab experiments in economics concerns the representativeness of participants usually considered in these studies. The ever-increasing number of experiments and the prevalent location of research centers in university campuses produced a peculiar category of subjects: Students with high level of laboratory experience built through repeated participations in experimental sessions. We investigate whether the experience accumulated in this way biases subjects’ behaviour in a set of simple games widely used to study social preferences (Dictator Game, Ultimatum Game, Trust Game, and Prisoner’s Dilemma Game). Our main finding shows that subjects with a high level of experience in lab experiments do not behave in a significantly different way from novices.
    Keywords: Experimental Methodology, External Validity, Experience, Lab Experiment
    JEL: D03 D83 C91 C92
    Date: 2016–07
  7. By: Chen, Daniel L.; Horton, John
    Abstract: In some online labor markets, workers are paid by the task, choose what tasks to work on, and have little or no interaction with their (usually anonymous) buyer/employer. These markets look like true spot markets for tasks rather than markets for employment. Despite appearances, we find via a field experiment that workers act more like parties to an employment contract: workers quickly form wage reference points and react negatively to proposed wage cuts by quitting. However, they can be mollified with “reasonable” justifications for why wages are being cut, highlighting the importance of fairness considerations in their decision making. We find some evidence that “unreasonable” justifications for wage cuts reduce subsequent work quality. We also find that not explicitly presenting the worker with a decision about continuing to work eliminates “quits,” with no apparent reduction in work quality. One interpretation for this finding is that workers have a strong expectation that they are party to a quasi-employment relationship where terms are not changed, and the default behavior is to continue working.
    Keywords: Economics of IS; Electronic Commerce; Field Experiments; IT and new organizational form
    Date: 2016–07
  8. By: Peng, Lin; Roell, Ailsa; Tang, Hongfei
    Abstract: We examine, both theoretically and empirically, the determinants and performance impact of three measures of CEO incentives: pay-performance elasticity (PPE), semi-elasticity (PPSE), and sensitivity (PPS). Larger, more R&D intensive, and low-idiosyncratic risk firms have higher PPE and PPSE, resolving puzzling prior empirical findings based on PPS. Performance is generally hump-shaped in PPE and PPSE; shortfalls relative to predicted levels appear particularly detrimental to firm performance, suggesting that the average firm's incentives are at the low end of the optimal range. Overall, the results obtained with the PPE and PPSE measures accord better with economic intuition than those obtained using PPS.
    Keywords: Executive compensation; pay-for-performance elasticity
    JEL: G32 G34
    Date: 2016–07
  9. By: Erling Barth; James Davis; Richard B. Freeman
    Abstract: We augment standard ln earnings equations with variables reflecting unmeasured attributes of workers and measured and unmeasured attributes of their employer. Using panel employee-establishment data for US manufacturing we find that the observable employer characteristics that most impact earnings are: number of workers, education of co-workers, capital equipment per worker, industry in which the establishment produces, and R&D intensity of the firm. Employer fixed effects also contribute to the variance of ln earnings, though substantially less than individual fixed effects. In addition to accounting for some of the variance in earnings, the observed and unobserved measures of employers mediate the estimated effects of individual characteristics on earnings and increasing earnings inequality through the sorting of workers among establishments.
    Date: 2016–01
  10. By: Vanessa Kummer (University of Zurich); Maik Meusel (University of Zurich); Philipp Renner (Stanford University - The Hoover Institution on War, Revolution and Peace); Karl Schmedders (University of Zurich)
    Abstract: In this paper we present some new results for the dynamic agent model by Iossa and Rey (2014, "Building Reputation for Contract Renewal: Implications for Performance Dynamics and Contract Duration,'' Journal of the European Economic Association, 12, 549−574) while also correcting some errors in that article. Iossa and Rey study the performance of an agent who repeatedly receives multi-period contracts and determine the optimal duration of such contracts in the context of an infinitely repeated multi-period agent model. We amend the characterization of the unique Markov perfect equilibrium for this model. In addition, we review the original welfare analysis of the model and either provide corrected proofs when possible or provide counterexamples. Our counterexamples overturn the main comparative statics results of the original analysis. We demonstrate that both the agent's optimal investment decision and the optimal contract duration depend non-monotonically on the information persistence and the agent's discount factor. In the final part of the analysis, we establish new results on the agent's optimal investment decision.
    Keywords: Career concerns, dynamic agent model, multi-period contracts
    JEL: D21 D23 D86 L24 L51
  11. By: Picchio, Matteo (Tilburg University, Center For Economic Research); van Ours, Jan (Tilburg University, Center For Economic Research)
    Abstract: From the point of view of workplace safety, it is important to know whether having a temporary job has an effect on the severity of workplace accidents. We present an empirical analysis on the severity of workplace accidents by type of contract. Method: We used micro data collected by the Italian national institute managing the mandatory insurance against work related accidents. We estimated linear models for a measure of the severity of the workplace accident. We controlled for time-invariant fixed effects at worker and firm levels to disentangle the impact of the type of contract from the spurious one induced by unobservables at worker and firm levels. Results: Workers with a temporary contract, if subject to a workplace accident, were more likely to be confronted with severe injuries than permanent workers. When correcting the statistical analysis for injury underreporting of temporary workers, we found that most of, but not all, the effect is driven by the under-reporting bias. Conclusions: The effect of temporary contracts on the injury severity survived the inclusion of worker and firm fixed effects and the correction for temporary workers’ injury under-reporting. This however does not exclude the possibility that, within firms, the nature of the work may vary between different categories of workers. For example, temporary workers might be more likely to be assigned by the employer dangerous tasks because they might have less bargaining power. Practical implications: The findings will be of help in designing public policy effective in increasing temporary workers’ safety at work and limiting their injury under-reporting.
    Keywords: workplace accidents; injury severity; temporary jobs; contract type; injury under reporting
    JEL: J81
    Date: 2016
  12. By: Haile, Getinet Astatike (University of Nottingham)
    Abstract: The paper investigates if there is a link between workplace disability (WD) and job satisfaction (JS) in Britain using nationally representative linked data from WESR2011 and alternative empirical analyses. The results obtained indicate that in the private sector, workplaces with respondents with disabilities have significantly lower JS vis-à-vis workplaces without such respondents. JS is also found to decline with the percentage of respondents with disabilities in private sector workplaces with a mix of respondents with and without disabilities. Notably; the decline in JS found for private sector workplaces is specific to co-workers without disabilities therein. These, coupled with the significant positive (negative) relationship found between workplace JS and disability policies and practices for respondents with (without) disabilities in private sector workplaces, suggest that the sector may have to go some way towards dealing with issues of workplace disability more efficiently.
    Keywords: workplace disability, job satisfaction, linked data, Britain
    JEL: J14 J82 J7 I31
    Date: 2016–07

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