nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒08‒28
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. How Do Labor Representatives Affect Incentive Orientation of Executive Compensation? By Dyballa, Katharina; Kraft, Kornelius
  2. The Pros and Cons of Sick Pay Schemes: Testing for Contagious Presenteeism and Noncontagious Absenteeism Behavior By Stefan Pichler; Nicolas R. Ziebarth
  3. Performance Pay and Malnutrition: Evidence from an Experiment targeting Child Malnutrition in West Bengal By Prakarsh Singh; Sandip Mitra
  4. Self-managed working time and firm performance: Microeconometric evidence By Michael Beckmann
  5. Do Firms Pay Bonuses to Protect Jobs? By Balazs Reizer
  6. Impact of caregiver incentives on child health: evidence from an experiment with Anganwadi workers in India By Prakarsh Singh; William A. Masters
  7. Information Acquisition, Referral, and Organization By Simona Grassi; Ching-to Albert Ma
  8. Augmenting the Human Capital Earnings Equation with Measures of Where People Work By Erling Barth; James Davis; Richard B. Freeman
  9. Human Capital Investments and Expectations about Career and Family By Matthew Wiswall; Basit Zafar
  10. Evaluation of the Teacher Incentive Fund: Implementation and Impacts of Pay-for-Performance After Three Years (Final Report) By Alison Wellington; Hanley Chiang; Kristin Heallgren; Cecilia Speroni; Mariesa Herrmann; Paul Burkander

  1. By: Dyballa, Katharina (TU Dortmund); Kraft, Kornelius (TU Dortmund)
    Abstract: Contrary to previous literature we hypothesize that labor's interest may well – like that of shareholders – aim at securing the long-run survival of the firm. Consequently, employee representatives on the supervisory board could well have an interest in increasing incentive-based compensation to avoid management's excessive risk taking and short-run oriented decisions. We compile unique panel data on executive compensation over the periods 2006 to 2011 for 405 listed companies and use a Hausman-Taylor approach to estimate the effect of codetermination on the compensation design. Finally, codetermination has a significantly positive effect on performance-based components of compensation, which supports our hypothesis.
    Keywords: executive compensation, board representation, principal-agent theory, corporate finance, Hausman-Taylor
    JEL: J52 L20 G32 M12 C33
    Date: 2016–08
  2. By: Stefan Pichler; Nicolas R. Ziebarth
    Abstract: This paper provides an analytical framework and uses data from the US and Germany to test for the existence of contagious presenteeism and negative externalities in sickness insurance schemes. The first part exploits high-frequency Google Flu data and the staggered implementation of U.S. sick leave reforms to show in a reduced-from framework that population-level influenza-like disease rates decrease after employees gain access to paid sick leave. Next, a simple theoretical framework provides evidence on the underlying behavioral mechanisms. The model theoretically decomposes overall behavioral labor supply adjustments ('moral hazard') into contagious presenteeism and noncontagious absenteeism behavior and derives testable conditions. The last part illustrates how to implement the model exploiting German sick pay reforms and administrative industry-level data on certified sick leave by diagnoses. It finds that the labor supply elasticity for contagious diseases is significantly smaller than for noncontagious diseases. Under the identifying assumptions of the model, in addition to the evidence from the U.S., this finding provides indirect evidence for the existence of contagious presenteeism.
    JEL: I12 I13 I18 J22 J28 J32
    Date: 2016–08
  3. By: Prakarsh Singh; Sandip Mitra
    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. First, we exogenously change wages of government employed child care workers through a basic level of absolute incentives. The second treatment introduces high absolute incentives. Finally, we also test for the impact of basic relative incentives on child health. All treatments include supplying mothers with recipe books. The main results suggest that high absolute incentives reduce severe malnutrition by about 6.3 percentage points over three months. There are no signi?cant e¤ects on health outcomes of basic absolute or basic relative incentives. Results are robust to controlling for prior trends, propensity score matching, and reversion-to-the-mean. This result is consistent with a reported increase in protein-rich diet at home in the high absolute treatment.
    Keywords: Performance pay; Child malnutrition; Absolute and relative incentives
    JEL: M52 I12 I38 J38
    Date: 2014–11
  4. By: Michael Beckmann (University of Basel)
    Abstract: This paper empirically examines the impact of self-managed working time (SMWT) on firm per-formance using panel data from German establishments. As a policy for the decentralization of decision rights, SMWT provides employees with extensive control over scheduling individual working time. From a theoretical viewpoint, SMWT has ambiguous effects on both worker productivity and wages. Based on the construction of a quasi-natural experiment and the combination of a differences-in-differences approach with propensity score matching as an identification strategy, the empirical analysis shows that up to five years after introduction, SMWT increases firm productivity by about 9% and wage costs by about 8.5%. This implies that SMWT improves both individual and firm productivity, and supplemental evidence shows that these productivity enhancements can primarily be explained by incentive effects associated with decentralization policies in general.
    Keywords: Self-managed working time, job autonomy, firm performance, treatment effect, quasi-natural experiment
    JEL: J24 J81 M50
    Date: 2016
  5. By: Balazs Reizer (PhD student at the Central European University)
    Abstract: A large share of workers receives bonus payments besides their base wage. The benefits of flexible wage components in remuneration are twofold: they can incentivize workers and make it easier to adjust wages downward in response to negative shocks. Using data on bonus payments of Hungarian workers from linked employer-employee data, I disentangle the importance of these two factors to assess their respective importance. First, I show that bonus payments flexibly adjust to the revenue shocks of firms. At the same time, the separation rate of workers without bonuses do not react more to revenue changes than the separation rate of workers with bonuses. Bonus paying firms are shown to be financially more stable, larger and more productive, and they have less volatile revenue than firms not paying bonuses. These facts are consistent with a wage posting model with incentive contracting, but they are hard to reconcile with models emphasizing the role of bonus payments in alleviating wage rigidity. These results indicate that wage flexibility regulations may not affect the employment responses of firms to negative shocks.
    Keywords: Wage Level and Wage Structure, Labor Demand, Monopsony
    JEL: J31 J23 J42
    Date: 2016–06
  6. By: Prakarsh Singh; William A. Masters
    Abstract: This paper provides evidence for the effectiveness of performance pay among government caregivers to improve child health in India. In a controlled study of 160 daycare centers serving over 4000 children, we randomly assign workers to receive performance pay or fixed bonuses of roughly similar expected value, and test for differences in malnutrition among the children in their care. We find that performance pay reduces the prevalence of weight-for-age malnutrition by about 5 percentage points in 3 months. This effect is sustained in the medium term with a renewal of incentives but the differential growth rate fades away once the scheme is discontinued. Fixed bonuses lead to smaller-sized effects and only in the medium-term. Both treatments appear to improve worker effort and communication with mothers, who in turn feed a more calorific diet to their children at home.
    Keywords: Performance pay; public health information; child malnutrition
    JEL: O1 I1 M5
    Date: 2016–05
  7. By: Simona Grassi (UniversitÈ de Lausanne); Ching-to Albert Ma (Boston University)
    Abstract: Each of two experts may provide a service to a client. Expertsícost comparative advantage depends on an unknown state, but an expert may exert effort to get a private signal about it. In a market, an expert may refer the client to the other for a fee. In equilibrium, only one expert exerts effort and refers, and the equilibrium allocation is ine¢ cient. Referral e¢ ciency can be restored when experts form an organization, in which a referring expert must bear the referred expertís cost. However, the referred expert shirks from work effort because of the lack of cost responsibility.
    Keywords: information acquisition, referral, organization, adverse selection, cost-reduction incentive
    JEL: D00 D02 D80 D83
    Date: 2016–02
  8. 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.
    JEL: J0 J01 J24 J3 J40
    Date: 2016–08
  9. By: Matthew Wiswall; Basit Zafar
    Abstract: This paper studies how individuals "believe" human capital investments will affect their future career and family life. We conducted a survey of high-ability currently enrolled college students and elicited beliefs about how their choice of college major, and whether to complete their degree at all, would affect a wide array of future events, including future earnings, employment, marriage prospects, potential spousal characteristics, and fertility. We find that students perceive large "returns" to human capital not only in their own future earnings, but also in a number of other dimensions (such as future labor supply and potential spouse's earnings). In a recent follow-up survey conducted six years after the initial data collection, we find a close connection between the expectations and current realizations. Finally, we show that both the career and family expectations help explain human capital choices.
    JEL: D81 D84 I21 I23 J10 J12 J13 J16 J24
    Date: 2016–08
  10. By: Alison Wellington; Hanley Chiang; Kristin Heallgren; Cecilia Speroni; Mariesa Herrmann; Paul Burkander
    Abstract: This report is the third report from the national evaluation of the Teacher Incentive Fund. It provides findings on the implementation of pay-for-performance bonuses for teachers and principals and the impacts of the bonuses on educator and student outcomes after three years.
    Keywords: pay-for-performance, teacher compensation, principal compensation
    JEL: I

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